The FT have prised open some details on a case last heard in 2019 which illustrates some of the interesting problemns inherent in independent investigations.
In this case, Ms A claimed unfair constructive dismissal and sex and disability discrimination, which included an allegation that she was raped by a UBS employee and failures in the investigation and handling of her complaint. The investigation was conducted by Caroline Stroud, a partner in Freshfields Bruckhaus Deringer and Ms A sought disclosure of the report to assist in her case. UBS resisted on the basis it was covered by legal advice privilege. Witness statements from Neil Young, Head of Regional Investigations UK/EMEA, and Caroline Stroud were filed in support of that assertion. The Claimant’s evidence included covert recordings of conversations with Ms Stroud and various UBS employees made by the Claimant which seems to prove crucial to the cases outcome.
This description of the facts comes from the Order giving judgment on the privilege question.
Having raised concerns to the President of UBS’s Investment Bank (a Mr Orcel) about how her complaint of rape had been dealt, Ms A met with the Global Head of HR (Ms McDonagh) who told her Orcel wanted to have an independent review of the concerns raised by her. “She said that he had brought in an external lawyer from a firm that was not used by the Respondent….” The suggestion that, “that Ms Stroud would be present at a meeting that she was to have with Mr Orcel” was resisted by Ms A. Ms McDongah said that Ms Stroud “would not be there as a lawyer”. Ms A was worried the lawyer was, “for some kind of liability or legal reason, which is not necessary,” but was told, “That wasn’t the driver. The driver was definitely about the fact that we’ve got an independent body, who is supposed to be doing a review of this complete situation….” McDonagh told the Claimant, “they had decided to do a review of the process because they wanted the process to be improved.” And said, “I’m sure that your next question is, “Will I hear the output [sic] of that review?” I commit to the fact that we will tell you what we are changing. Now I can’t say other than that.” Ms A persisted in her objections to meeting Orcel with Stroud present and was told,
“it’s unfortunate she’s a lawyer, actually, because, she’s coming in, in a very different capacity, doing a very different role.”
When Ms A met Orcel “he said that he had not hired her because she worked for Freshfields”. Saying she was someone who understood “this kind of situation”, the regulations, and banks; someone, “thoughtful, experienced, and … had a good reputation for doing what’s right, etc, etc.”
“Actually, I — at the beginning I didn’t even know that she was working for Freshfields, so, for me. She’s not — the fact that she’s a lawyer adds in a way. Everything in this industry ends up with lawyers, but, but I think the important thing is that I have an expert on the job that is determined to get me all the things that I — that, in her opinion, are not best in class, who are not done, or have been done in … the wrong way, or whatever it is. “
Orcel told Ms A. “that the review would cover everything that happened between her reporting the rape and Employee X resigning.” He was asked “whether he would be happy to share the outcome of Ms Stroud’s review with her and he replied that he would be able to share “all the lesson learns”.”
Following that meeting, the Claimant met with Ms Stroud. Ms Stroud said that she was going to be conducting an independent review. The Claimant asked her what “independent” meant and Ms Stroud said they were not the Respondent’s normal advisors and hadn’t advised them on the process. She continued,
“So, I suppose they say independent because we’re not advising them … we’re doing a review of what they did … and then we’ll be telling them what we think about that and making recommendations. “
Asked about the Respondent reporting the matter to the FCA, Ms Stroud said,
“We’re not advising them on all that ’cause we’re dealing independently .we’re doing the independent review … And then telling them what we think should be done better. We’re not advising them on the sort of legal position or anything like that … because we’re independent … So, we’re not their lawyers, if you see what I mean.”
At a subsequent meeting Ms A met with Caroline Stroud and Ursula La Roche (Global Head of Group Investigations) to discuss the results of the investigation. That would include sharing a written Executive Summary “but [that] did not cover everything…. [F]our findings were set out in a confidential report for the Respondent… and she could not talk to her about them” because there was an ongoing police investigation and Data Protection concerns.
“[T]hey had concluded that there were no fundamental errors in the investigation process and the Investigation team had sought to conduct the investigation fairly…[and that] …they had identified ways in which the bank could improve its investigation and had made some recommendations.
Ms A was, “clearly unhappy that she was not being given any more details about the findings of the review, and Ms Stroud said that that the information she had given in the report was privileged and that it was UBS’s privilege.”
If I can divert from reporting the judgment for a moment, I would like to emphasise the words summarising the report at its most general level: there were no fundamental errors and the team has sought to investigate fairly.
The Confidential Summary Report’s recommendations for improvement included minimising delay in conducting initial interviews with the parties to the complaint; taking “prompt steps to separate the two key individuals involved in the workplace while the investigation continues”; and reducing delay towards resolution as far as possible; ensuring “early identification of the scope of the sexual misconduct investigation”; training appropriate staff “in how to investigate sexual misconduct and how to provide wellbeing support” to complainants “ideally… separately from the investigation process and …after the investigation has concluded”; keeping “the complainant informed regularly as to the progress of the investigation and any resolution”; carrying out “widespread training across the Bank on appropriate behaviours at work-related events involving alcohol”; ensuring “a continued strong tone from the top of zero tolerance of sexual misconduct”; and, reconsidering triage, notification, recording, and reportability of the offences including notification to the FCA. The creation of a confidential sexual misconduct complaints hotline and a specialist sexual misconduct champion were also recommended.
Neil Young, the Bank’s Head of Regional Investigations UK/EMEA, supported the view that the report was privileged in his written evidence. From the outset, he said, “he and another senior person in Group Investigations were strongly of the opinion that they should engage legal counsel” given, “potentially very serious legal and reputational consequences for the Bank.” Saying, they should,
“instruct a major law firm which had the necessary experience, expertise and standing to conduct a thorough and comprehensive review and would have close regard to the question of whether the Bank had conducted itself properly and legally in the way in which the investigation had been conducted.”
He produced, a draft document scoping any review. Which suggested reviewing and benchmarking UBS HR policies and procedures against best practice; reviewing “HR’s investigation of the matter” including its scope, timeliness and treatment of both parties”; reviewing “the appropriateness of the findings of the HR investigation based on the available evidence”; “the appropriateness of the decision-making process .. [and the] decisions taken; “whether UBS met its reporting obligations to regulators, and to advise whether any improvements in UBS’s approach to HR-related matters can be made going forward.” As the Respondent did not instruct it on other UK employment matters “Freshfields was seen as being able to prove the bank with an independent legal view”. He and Jamie Howard, Head of Employment Legal EMEA, provided instructions to Freshfields:
“At the outset we agreed with Freshfields that it would provide a legally; privileged report containing the firm’s legal advice on the appropriateness of the original investigation. This is the report over which the Bank claims privilege. It was also envisaged that Freshfields would prepare a separate summary report that would be treated as an open report that could be shared with A.”
We do to get to see the actual terms of reference for the report. That privileged report, “was written by lawyers in their capacity as lawyers and they relied on their expertise as such, and their knowledge of the relevant areas of law, to make their recommendations and to give their advice.” Furthermore he said:
“…if Ms Stroud had told the Claimant, as the Claimant alleged in her particulars of complaint that she had, that she was not advising UBS, such a statement would have been inconsistent with the basis upon which Freshfields had been instructed. In his supplementary witness statement he said that the report was nearly 60 pages long (including appendices).”
As a reminder, the evidence the Judge drew on (from the transcripts of the recorded meeting one assumes was that Ms Stroud said, “So, I suppose they say independent because we’re not advising them … we’re doing a review of what they did … and then we’ll be telling them what we think about that and making recommendations.” And she specifically points out they are not advising on FCA reporting and says, “We’re not advising them on the sort of legal position or anything like that … because we’re independent ….” So on the face of it she tells the complainant twice that she is not advising.
Ms Stroud’s witness statement described “the primary objective of the review …as external counsel, to provide the bank with an independent opinion as to the adequacy of the Bank’s HR departments’ overall handling of the complaint in the form of a report.” “The terms of reference also provided that the output of the review was to include the provision of learning points and recommendations for the future for the bank.” She said, “they would be using their legal expertise and experience” in doing that.
Ms Stroud said that her view was that any advice which they gave to the Bank would attract legal advice privilege so that the report would be privileged and confidential, although not all matters which took place as part of the review would necessarily attract privilege.
She also said,
“We were not, and have never been instructed, to advise the Bank on what HR, civil, criminal, regulatory or any other legal steps it should take in relation to the Bank’s response to the Complaint and our Review nor on what regulatory litigation, criminal, civil or other exposure or otherwise the Bank might have by reason of the events raised by Ms A and the bank’s handling of the complaint.”
Stroud’s witness statement goes on to say,
“…The Review looked retrospectively at the bank’s response to the Complaint and specifically the processes it followed, and we were tasked with giving an independent opinion on that process, advising them on that from an HR legal and regulatory perspective and advising whether improvements could be made in the future.”
The judge turns to whether the report was privileged against that evidential backdrop deciding, in essence, that the Bank had not established on their evidence that the report was a written communication made for the purpose of enabling the lawyer to give legal advice in confidence. Rather than rely on Mr Young’s evidence, which was rejected as mistaken, Mr Orcel’s conversation with Ms A was preferred where he had said that Ms Stroud was not selected because she worked for Freshfields but someone who, understood sexual misconduct investigations, regulations, and banks, “who was methodical and who would not be forthright in telling him what she found.” She was,
“thoughtful, experienced and had a good reputation for doing what was right. The fact that she was a lawyer was an added extra but what really mattered to him was that he had an expert who would tell him what they had done wrong and what they needed to do to improve things.”
Ms McDonagh telling the Claimant, “that it was unfortunate that she was a lawyer because she was coming in in a very different capacity doing a very different role,” was also important.
“All the evidence before me indicates that the Respondent did not select Freshfields because it wanted a major law firm or Ms Stroud because it wanted a lawyer. It selected her because she was reputed to have the skills that Mr Orcel wanted in the person who conducted the review.”
And, “Ms Stroud told the Claimant that she was not advising the Respondent on the legal position or anything like that; she was doing a review of what they did and would tell them what should have been done better and make recommendations about that.” Furthermore, “Mr Young’s draft scope of the review makes no reference to the external counsel providing legal advice.” She was asked, “to provide the respondent with an independent opinion as to the adequacy of its HR department’s overall handling of the complaint….”
An argument that Ms Stroud “was giving advice in a relevant legal context [in reviewing] …a complaint of serious misconduct (an allegation of breaches of criminal and civil law) and the Respondent’s effort to investigate that complaint,” fell on similarly stony ground for similar reasons. Ms Stroud had not been picked as a lawyer to advise with “legal spectacles” on or to advise on rights, liabilities, obligations or remedies so it was not a relevant legal context. And when first asked to justify the confidentiality of the main report had relied on Data Protection and the ongoing police investigation , only going to privilege for justification under further questioning from Ms A.
Students of privilege might be wondering if there might also have been a waiver of any privilege. The judge plainly thought the situation was analogous, because the Bank appeared to have cherry-picked findings in the summary, but UBS was not seeking to rely on the investigation report in the litigation and so the judge held we would not have found a waiver had his judgment depended on that.
The analogy with waiver is interesting and potentially important though, because it may raise professional ethics concerns. Ms A. “was told that they would share the lessons learnt or the changes that they were making with her” from the Review but, “was not told that they would share the outcome of the review with her.” Yet when Ms Stroud and Ms La Roche met with the Claimant they:
shared with her not only the recommendations made by Ms Stroud but also some of her conclusions. Those were conclusions that were favourable to and exonerated the Respondent. Fairness would demand that either the Respondent did not share any of the findings with her or, if it chose to do so, that it did not cherry pick which ones it shared.
The judge is discussing this in the context of a waiver argument, rather than the context I am wondering about: was this taking unfair advantage of Ms A. by cherry-picking the report’s findings ? If so is it a breach of Rule 1.2 (“You do not abuse your position by taking unfair advantage of clients or others.”)? The FT story which led me to this reports that the SRA is investigating but has yet to decide what to do in this case (given the time elapsed one surmises a decision should be close). Might they be looking at this side of it? Young’s evidence on the draft scope of the review and the recommendations suggest there might be quite a list of concerns in the report even if they do not meet the test of ‘fundamental’ concerns. One might also wonder if the report suggests that the UBS team sought but failed to investigate the claim fairly. Certainly the summary finding that the investigation team “sought to conduct the investigation fairly” is rather feint in the praise it provides. Was the summary report an independent and fair view of the more detailed report? An interesting question for the SRA and perhaps the SDT will be whether obligations of independence are heightened when the solicitor holds themselves out as an independent investigator in this way. The situation, to my mind goes beyond, say, the duty of candour litigators owe in without notice hearings to something more quasi-judicial.
It also raises a question as to whether the truncated reporting of the investigation and the summary of it, and the basis on which Ms Stroud’s role was explained to her, is one which mislead Ms A, deliberately or otherwise. I find myself returning to Jackson LJ’s words in Wingate and Evans on integrity here as I suspect this will inform the SRA’s thinking:
“Integrity connotes adherence to the ethical standards of one’s own profession. That involves more than mere honesty. To take one example, a solicitor conducting negotiations or a barrister making submissions to a judge or arbitrator will take particular care not to mislead. Such a professional person is expected to be even more scrupulous about accuracy than a member of the public in daily discourse. The duty to act with integrity applies not only to what professional persons say, but to what they do.”
Or was this a case where the handling of the investigation was fumbled and the protections of privilege lost, with the lawyers involved in- our outside counsel failing to shepherd the early communications between the complainant? If so the best interest of the client may have not been adequately protected. At the very least the case is a salutary reminder of the need for lawyers engaged in ‘independent’ investigations to be very clear indeed with all the witnesses to such investigations about remit, role, reporting and confidentiality.
And a final point, I think many lawyers, and even more clients, will panic at the thought that independent investigations might not be privileged. One way of reading with this is that the case principally turns on UBS holding out the non-lawyerlyness of the investigation, and the lawyer emphasising a reporting not advisory role. But it might also be read with a warning that investigations are largely fact gathering not advisory exercises. And here I think there are two very divergent possible takes. One is that independent investigations are too often organisational window-dressing, and it may be no bad thing that independent investigations are inhibited if they need to rely on dubious claims about the nature of the investigators role. At the very least there should be greater care than shown here about what participants in such investigations are told in the course of such investigations. The alternative is that knowing that privilege for fact finding from most employees, which is essentially what we are concerned with here, is not and never has been protected by privilege unless preparing for litigation (and then it is plainly not independent). Cases like this might help bolster the independence of investigations conceived of and conducted in a stronger spirit of actual independence and kill of the ones conducted for show or ensure that they are conducted with more straight-forwardness.