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The number of private equity (PE) firms investing in the sports sector appears to be ever increasing, and there have been a number of recent transactions in the sector that are noteworthy.

Often the negative actions of an individual, either in their personal or professional capacity, can have consequences for their organisation. This is often seen in the professional sports environment where the actions of players and athletes can reflect poorly on their club or organisation. This blog is the latest in a series of articles discussing the rising need for investigations in sport and sets out key considerations when managing an investigation related to wrongdoing by an individual at a sports club.   

Conflicts of interest

The individual misconduct of a player can leave their employer in a vulnerable situation. How can the organisation effectively balance the interest of their player and their relationship with the organisation and the interests of the general public, the media and shareholders? 

Maintaining an effective, open and honest communication strategy can be key to ensuring that balance against competing interests is achieved. 

1. Firstly, opening up a line of communication with the player or athlete and/or their management can be a helpful first step. This open line of communication can allow the management of the organisation to establish the key details of the issue and ensure that no ‘surprises’ come to light following any formal statements by the organisation. 
2. Secondly, in the right circumstances, establishing an open line of communication with regulators and/or the authorities can often be an effective way of mitigating the impact on the business. 
3. Thirdly, in conjunction with communication and consultation with the individual, organisation management and, if necessary, the regulator or authorities, attention must be given to the press strategy. In an age of social media and instant news stories, care must be given to the nature and substance of any press statements and thought given to their impact on the reputation of the organisation and its relationship with the individual. 

Depending on the seriousness of any misconduct, legal representation may be required. This can lead to situations where the club is placed in a conflict of interest. Therefore, it is important that even where interests appear to align, it is advisable that the individual and the organisation are separately represented. Authorities will often take a similar view; the SFO, for example, strongly recommends that a company and an individual do not have the same legal representation.

Document sharing

The sharing and protection of documents is a critical part of the investigatory process. When sharing documents, even to internal recipients, it is essential to consider privilege implications. 

Documents and communications produced with, or by, an external lawyer may be protected by legal advice privilege, where a document has been produced by a lawyer and the dominant purpose of the document is to obtain legal advice. It is very important to note that legal advice privilege is not always attached to documents produced by internal lawyers. English law does not draw any distinction between in-house lawyers and lawyers in private practice. The European Court of Justice, however, has held that communications between a company and its in-house lawyers in the context of EU competition investigations are not protected by legal advice privilege; this is on the basis that in-house lawyers, unlike external lawyers, are not deemed sufficiently independent. Secondly, the protection of privilege is not guaranteed. For instance, sharing a privileged document, and loss of its confidentiality, will lead to a loss of privilege. When circulating privileged material, it is important to mark the document as ‘confidential and privileged’ and not for onward circulation, and to emphasize to the recipients the importance of treating the material as confidential. 

Further information on privilege can be found in this article.

An effective way of protecting the privilege of documents is to establish a ‘core’ team who will handle the investigation. When a privileged document is created or sent by email, it should be agreed that only the ‘core’ team (and/or external lawyers) will have access. This can also be a critical method of protecting confidentiality and preventing external information leaks in particularly sensitive investigations, for example when the subject is personal misconduct of players. This ‘core’ team should include all necessary personnel for the investigation and may comprise: HR directors, in-house legal counsel, PR/individual communications personnel, and the organisation’s senior leadership. For further information on running an investigation, and for advice on conducting interviews, watch our Global Investigations Masterclass here.

To read the previous posts in this series, please click here. 

The authors would like to thank Jake Burke, Norton Rose Fulbright solicitor apprentice, for his assistance with this blog post and series.