Fraud Investigations Under Legal Professional Privilege: What Solicitors Need to Know
When a business suspects fraud, the decision of how to investigate is as important as the investigation itself. Instructing a forensic accountant directly may waive privilege over the findings. Instructing via solicitors preserves legal professional privilege over the investigation and resulting report.
LPP Protection
Legal professional privilege attaches to communications between a client and their legal adviser for the purpose of obtaining legal advice, and to communications between the legal adviser and third parties (such as forensic accountants) where those communications are made for the purpose of providing legal advice to the client.
This means that a fraud investigation report instructed via solicitors is protected from disclosure to the opposing party until the instructing party chooses to waive privilege, typically by issuing proceedings.
Why Instruct via Counsel
For significant fraud investigations, instructing via counsel as well as solicitors provides an additional layer of privilege protection and ensures that the investigation scope is properly defined from the outset. Counsel can also advise on the evidential strength of findings before deciding whether to commence proceedings.
Investigation Scope and Disclosure
The scope of a fraud investigation should be defined in the letter of instruction, covering the period to be investigated, the records to be reviewed, and the deliverables expected. Solicitors should consider disclosure implications at the outset: once proceedings are commenced, the investigation report may become disclosable unless privilege is maintained over specific categories of document.
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