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Comment: Hired guns and troubleshooting – privilege confusion in UBS rape probe another jolt for City law

Legal hacks frequently stand accused of making sensationalist statements once the dust has settled when it comes to lawyer conduct in emotive matters, especially where the Solicitors Regulation Authority (SRA) is involved. In our defence, we largely base initial treatment of these cases on the views of numerous market contacts at the time.

The overturning of findings against former Freshfields Bruckhaus Deringer partner Ryan Beckwith last year springs to mind. Early sentiment was of general horror about unhealthy drinking cultures and abuse of power. Later many City partners reviewed their opinion to align with the High Court’s assertion that ‘popular outcry is not proof that a particular set of events gives rise to any matter falling within a regulator’s remit’ – the age-old dismissal of the case that ‘this sort of thing happens all the time’.

With this in mind, recent disclosures from an employment tribunal regarding a high-profile ‘independent inquiry’ by Freshfields employment partner Caroline Stroud into how UBS handled an alleged rape, reported in the FT, must therefore be treated with restraint.

The findings of the 2019 employment tribunal handed down by Judge Harjit Grewal assert that the report prepared by Freshfields was not covered by legal advice privilege, as UBS claimed. The publication of the ruling was prompted by a letter from the alleged victim (referred to as Ms A as she has life-long anonymity) to the judge, dated 1 April 2021.

The letter urges the judge to publish the order made in November 2019 ‘because it is firmly in the public interest’ to do so: ‘If made public, the order will create legal precedent and raise important points of law regarding legal advice privilege, its waiver, and independent investigations,’ Ms A wrote. ‘It would better place claimants, and the wider industry, to understand what these investigations are often about, whilst demonstrating the tactics used by employers when conducting them.’ She also raised concerns around corporations enlisting ‘hired guns’ to sort out their PR headaches.

In the ruling, the judge said UBS could not rely on legal privilege because employment partner Stroud had been hired to conduct an independent inquiry into how the bank’s HR team had responded, rather than acting in the capacity of legal adviser to the bank.

Stroud was drafted in by UBS in 2018 to review the way the bank dealt with allegations that Ms A, a former employee of the bank, had been raped by a colleague. While the 2019 employment claim – filed by Ms A against UBS for failing to protect her – was later settled confidentially, the new disclosures nevertheless beg some serious questions over what constitutes a bona fide independent investigation.

The crux is the apparent lack of accord between the parties on Stroud’s role.

The SRA is continuing to review complaints that Stroud did not make her role in acting for UBS clear to the alleged victim. Ms A claimed that she co-operated with the Freshfields investigation after being assured by senior UBS figures that Stroud had not been hired to give the bank legal advice.

Freshfields has declined to comment as it was not party to the tribunal. Stroud will be retiring from the partnership after 20 years at the firm – a move that is unrelated to the SRA investigation.

Controversially, Ms A was only handed a summary of the findings from the investigation that exonerated UBS – not the full report – on the grounds that the document was covered by lawyer-client privilege. According to the ruling, the judge found that ‘fairness would demand that . . . [UBS] did not cherry pick [what] it shared’, and that it had told Ms A that Stroud was not acting as a lawyer, but merely giving advice and suggestions about how the bank handled the claim. As such, the report was not deemed to be protected by privilege.

Judge Grewal said evidence from the bank’s managing director for group investigations, Neil Young, in which he said the bank had hired Stroud to give the bank legal advice, was ‘very difficult, if not impossible’, to reconcile with evidence regarding what other UBS employees had told Ms A. According to covert recordings of senior executives, which were cited in the decision, the then head of investment banking Andrea Orcel told Ms A that he did not originally know that Stroud worked at Freshfields. He said he had hired Stroud because 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’.

Siobhan McDonagh, the bank’s head of HR in the UK, told Ms A that Stroud was acting ‘in a very different capacity, doing a very different role’ from her legal advisory role.  Conversely, Young said it had always been clear that Freshfields was being hired as outside legal counsel and the report would not be shared with Ms A.

Perhaps even more contentious is an exchange between the claimant and Stroud where the latter contested Ms A’s account of the meeting they had, arguing that Ms A had taken quotes out of context which were capable of being misinterpreted. Stroud explained that she had said of her team that ‘we’re not their lawyers’ because they were ‘newly appointed lawyers from Freshfields and not UBS’ normal advisors’.

Suzanne McKie QC, managing partner and founder of Farore Law, acted for Ms A in the employment tribunal and says firms have to be more rigorous. ‘There are too many Magic Circle firms conducting so-called independent investigations that are not truly independent. How truly independent are they from the person paying the money and do they have previous relationships with the bank or organisation requesting the report to be done? They need to think about that. I won’t be the first to argue it’s not covered by legal privilege and succeed in doing so.

‘Every lawyer doing this sort of exercise needs to ask themselves, what is my role in this? Am I going to shift somewhere during the course of this into providing legal advice? Is my client then going to say – “we’d better cover this with privilege” or this is covered as privilege?

‘As a lawyer it’s vital that you work out what your role is, you make it quite clear to the bank or the company that you will not be providing legal advice, that you’re not acting as legal adviser and this report will not be privileged. Only then can it be truly independent.’

And, at the risk of provoking the ‘#notallawyers’ retort, this should not be that difficult, given the general fastidiousness associated with the profession – with or without watchdog intervention.

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