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Legal Minds

1 July 2016 / by / in

Control of internal reviews and emails

When the prospect of a dispute looms, it may fall to you as in-house counsel, to initiate an internal review or to be the first port of call, either to collect or to preserve the company’s relevant documents. With emails, it’s impossible to control every email that has been sent on behalf of the business, but how can you try to ensure that you’ve done what you can and protected the company as far as possible?

1. During any potential dispute, are there any principles for controlling information? A dispute can take many forms, for example, a major contract for the business is going/has gone pear shaped – there may also be fraud involved or it may have come out of the blue. If there is a dispute, some of the emails from your team and between your team may eventually need to be disclosed to an opposing party for example the customer or main contractor or the sub-contractor. These emails may appear to contain highly damaging admissions between members of your team, such as (in an IT project context), “we have no chance of making the next milestone”.…”it’s going to be impossible to get the defect level below the threshold… “. Is there any governance or process already in place to warn against creating such emails and advising of the potential consequences of such exchanges, both during business as usual and during any deterioration period?

2. Similarly, in an urge to be seen to be doing the right thing, or at least to be doing something, some actions by the company under pressure can ultimately have a worsening effect on the business. For example, the company wants to be seen to be taking swift action in the midst of discovering a fraud or acknowledging a failing contract, so it instructs an external expert to investigate and to draft a report highlighting what has gone wrong.

The investigation is a thorough and expensive exercise, being conducted by a team and the report is a no holds barred examination of the last 6 months’ performance. Among the findings, it is critical of one of the company’s teams and the failure to have either proper processes in place and/or of the team’s failure to follow them. Fast forward 3 months and the company is involved in a dispute with a third party in relation to the causes of the problem. The third party knows about the report because the company told them it was in progress to reassure and allay concerns when relations were better, everyone was in the same boat and a possible claim was not in the forefront of people’s minds. Now the impact and rough costs of the problem are broadly understood and someone needs to be held responsible. The third party want to see the report, plus the instructions to the expert and all the company internal emails at the time of its drafting. The report directs the third party straight to the company’s failings, giving the third party arguments to defend its position, deflect responsibility and possibly even to counterclaim against the company. It could have all been so different, if the instructions to the expert and the report had been carried out under legal advice privilege, which would have protected the company from an obligation to include it in any disclosure to the third party.

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