Law Firms - Production Order FAQs

Production orders issued against law firms in criminal investigations give rise to challenging issues around client confidentiality and legal professional privilege, requiring law firms and lawyers to carefully balance obligations to their client and the court. The same challenges arise with section 2 notices, disclosure orders and search and seizure warrants.
 

Production orders provide an effective tool for investigating authorities to obtain relevant material in connection with a criminal investigation. A law firm may find itself unexpectedly embroiled in a criminal investigation into one of its current or former clients when it receives a production order requiring client material to be provided or an investigating authority exercises some other power of compulsion. These investigations often involve suspected money laundering or financial crime, which means that lawyers who undertake transactional work, such as in the field of conveyancing, are at particular risk given the fact that they handle significant sums of money on behalf of clients and are likely to hold sensitive information that may be highly relevant to an investigation.

Whatever the nature of the request, a law firm must act with extreme care to ensure it does not breach its professional and regulatory obligations regarding client confidentiality and legal professional privilege (LPP), whilst at the same time ensuring compliance with any production order that has been issued and avoiding prejudicing the investigation through the information the firm provides to its client.

In these FAQs, we address the key issues that can arise when a law firm receives a production order in connection with a criminal investigation.

What is the difference between Legal Professional Privilege (LPP) and client confidentiality?

LPP applies to certain types of communications between a client and their legal adviser or, in the context of litigation, between the client or their legal adviser and a third party. It also applies to certain categories of related documents. There are two types of LPP: legal advice privilege and litigation privilege.

Client confidentiality is broader in scope than LPP. It applies to all information relating to a client’s affairs. All LPP material is confidential, but not all confidential material is covered by LPP.

The obligation – as set out in the SRA Codes of Conduct - on a solicitor or indeed a law firm to keep a client’s affairs confidential is subject to an exception, if disclosure is required or permitted by law, or the client consents. Material that is subject to LPP, on the other hand, can only be disclosed to a third party if the client consents and privilege is thus waived. A lawyer cannot unilaterally waive their client’s privilege.

Can client information be provided without a production order?

Unless a client consents to disclosure, information or documentation that is confidential but not privileged cannot be provided to a criminal investigator unless a production order has been issued or the investigator is exercising some other statutory power of compulsion. The regulatory position is the same: confidential client information may be disclosed to a regulator such as the Solicitors Regulation Authority (SRA) only if there is a statutory power upon which the request is based or a statutory production notice is issued. This includes merely confirming whether the firm acts or has acted for a particular client, if this information is not already known to the investigating authority. There are likely to be sensitivities around the information a lawyer can share with their client in these circumstances (and see below regarding the offence of tipping off), so it will probably not be possible to obtain the client’s consent.

Whether or not there is a production order, LPP material cannot be disclosed without the client’s consent.

What powers are available to investigating authorities?

There are a range of powers available to investigating authorities to compel the disclosure of relevant material in connection with a criminal investigation. The most common are:

• A production order under schedule 1 to the Police and Criminal Evidence Act 1984 (PACE), available to the police, HMRC and, in some cases, the National Crime Agency (NCA).  
• A production order under section 345 of the Proceeds of Crime Act 2002 (POCA) or a disclosure order under section 357 POCA, available to the police, HMRC and other authorities in money laundering investigations and other proceeds of crime investigations.
• A notice under section 2 of the Criminal Justice Act 1987 (CJA), issued by the Director of the Serious Fraud Office (SFO).

Some of these powers can also be exercised on behalf of authorities in other countries through mutual legal assistance.

Production orders and disclosure orders under PACE and POCA are issued by a crown court judge on the application of the relevant investigating authority. Section 2 CJA notices are issued directly by the SFO. An order or notice will specify the material that is being requested and the deadline for providing it. A failure to comply without reasonable excuse is a criminal offence or, in the case of a production order under PACE, may be treated as a contempt of court.

Can production orders be used to obtain privileged material?

None of these powers can be used to obtain privileged material. The statutory provisions governing them contain express exclusions in respect of privileged material.

What type of material will be privileged?

In transactional matters that do not involve actual or contemplated litigation, only legal advice privilege is capable of applying. Generally speaking, this will include not only communications between the client and the lawyer made for the dominant purpose of giving or obtaining legal advice, but also potentially draft documents prepared by the lawyer, the lawyer’s own notes relating to the matter and the client’s annotations on documents (among other items). Purely financial information regarding payments the firm has received or transactions it has facilitated, such as those recorded in the firm’s ledger, will not be privileged, nor will anti-money laundering or other compliance records, unless these somehow reveal the content of legal advice or other privileged communications.

Ultimately, the precise scope of LPP will vary from case to case and will depend on the facts. Not everything a lawyer holds relating to their client will be privileged. Deciding what falls within its scope can be complex and requires expert knowledge of the law of LPP. Every individual item must be considered separately and it is not possible simply to make a blanket assertion of LPP over everything in a client file or everything relating to a particular issue.

What are the risks for a law firm that receives a production order?

Failure to protect client confidentiality or maintain LPP is a serious breach of a lawyer’s professional obligations and may result in investigative and disciplinary action by the SRA. It is likely to have significant consequences for the client, especially in a criminal investigation, and may give rise to a separate civil claim by the client against the firm. At the same time, and as noted above, a firm may commit a criminal offence or be found to be in contempt of court if relevant, non-privileged material is withheld from disclosure. There is therefore a balance that needs to be struck.

Lawyers also face potential exposure if they disclose information about the request to their client. It is a criminal offence for a person in the regulated sector (such as a solicitor involved in transactional work on behalf of a client) to disclose to another person, such as their client, that a money laundering investigation is being contemplated or carried out if the disclosure is likely to prejudice the investigation and the information on which it is based came to the person in the course of their business in the regulated sector. This is known as ‘tipping off’.

Can law enforcement attend a law firm’s offices and seize material?

In certain cases, an investigating authority may choose to execute a search warrant at a firm’s premises and seize relevant material, rather than obtaining a production order. This might be the case if there are concerns that, were a production order to be served on the firm, evidence might be destroyed or interfered with. A number of provisions therefore allow for investigating authorities to apply to the court for a search warrant. This will authorise investigators to enter and search the premises for material specified on the warrant and seize it.

As with the powers of compulsion discussed above, none of the search and seizure powers authorise the seizure of privileged material. The only limited exception is if investigators exercise ‘seize and sift’ powers under the Criminal Justice and Police Act 2001 (CJPA) when executing a search warrant. These powers allow material to be seized so that the determination of whether there is an entitlement to seize the material or the separation of the seizable material from other material in which it is comprised can take place at a later stage rather than on the premises at the point of seizure. These powers are typically used where there is a substantial volume of material on the premises or it is stored on electronic devices. Despite the exception being available, the CJPA imposes strict obligations on what must be done if it is later discovered that the material is or contains items that are privileged.

What should a law firm do if it receives a production order or a request for client material?

Cases of this nature invariably raise complex issues relating to criminal law, regulatory obligations and LPP, with significant potential consequences for firms, lawyers and their clients if the issues are not handled correctly. It is essential that firms seek specialist legal advice as soon as possible after contact is made by law enforcement, especially because the timeframes imposed are usually tight.

Our specialist criminal and regulatory lawyers can assist with cases of this nature. We are experts in this field and have a wealth of experience advising law firms involved in criminal investigations. We can liaise with the investigating authority on a firm’s behalf, ensuring that, if contact is made before a production order is issued, the terms of the request are clear and unambiguous and an appropriate period of time for compliance is specified. We can review potentially relevant material to determine whether it falls within the scope of the request and, if so, whether it is covered by LPP, and we can then prepare a response to the investigating authority. We are also able to advise on related issues, such as what information (if any) can be shared with a client or a third party, such as the firm’s insurer.

If you have any further questions, or need additional guidance around law firm criminal investigations, please contact our law firm criminal investigation experts.