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Funding for corporate participants in the COVID Inquiry

The government has announced that a public inquiry will be held into the country’s response to the COVID-19 pandemic. The inquiry is expected to start in Spring 2022, and further details on arrangements and scope are expected soon.

Very many businesses (and indeed organisations, charities and individuals) are considering whether they will wish to participate in the Inquiry, and how their participation (in particular legal representation) might be funded.

By ‘participate’ we are referring in this article to those businesses who are looking for ‘Core Participant’ status – that is to say, those who wish to take an active role in the inquiry, whatever shape that develops into. Core Participants have special rights in the inquiry process. These include receiving disclosure of documentation, being represented and making legal submissions, suggesting questions and receiving advance notice of the Inquiry’s report.

Core Participants are distinct from those businesses who might be called upon to give evidence to the inquiry, but will play no further part in it (although Core Participants are likely to be called upon to give evidence in addition). It's important to note that businesses who are asked to provide evidence to the inquiry will almost certainly be obliged to do so1.

Certain businesses will be invited by the inquiry to apply for Core Participant status, depending on the scope of the issues to be considered. Those who are invited to do so do not have to make an application, but there may be reputational and litigation risks2 if the invitation is declined. Businesses who are not invited to do so may nevertheless wish to apply to join the inquiry as a Core Participant.

Businesses might be invited, or wish, to seek Core Participant status if for example:

  • The Inquiry wishes to understand what impact the COVID pandemic and/or the government response had on the company or the sector in which the company operates;
  • The Inquiry is likely to be looking in detail at the company’s COVID response;
  • The Inquiry’s conclusions might have an adverse effect on the company’s reputation;
  • The Inquiry’s conclusions might have an impact on future civil or criminal litigation against the company;
  • The company has a business interest in the lessons to be learned from the country’s response; or
  • The company’s stakeholders, clients or customers were especially affected by COVID.

The same reasons might apply whether the company is big or small. Businesses of all sizes may find themselves wanting to participate but unsure as to how legal representation could be funded.

Broadly there are three possibilities – public funding, insurance funding or self-financing (whether alone or as part of a group of similar businesses).

Public Funding

Section 40 of the Inquiries Act 2005 provides that funding for legal representation can be made out of the Inquiry budget (in effect, public funding, as the Inquiry will be funded by government).

Rule 21 of the Inquiries Rules 2006 provides the Inquiry Chairman with guidance as to when funding might be awarded. The Chairman must take into account (a) the financial resources of the applicant and (b) whether making an award is in the public interest.

Bluntly, we think it is unlikely that many if any businesses will benefit from public funding for the purposes of representation at the COVID Inquiry, even for those companies who find themselves required to give evidence or invited to apply for Core Participant status. If public funding were to be awarded, it is likely that a large number of businesses would be required to share legal representation, with strict limits on the level of input the legal representatives would be able to provide. Spending on public funding will always be closely scrutinised.

Insurance funding

Many business insurance policies include cover for the costs of participating in a public inquiry, particularly where the process or outcome may influence future civil or criminal litigation against the company. Businesses should check their insurance policies carefully to ascertain whether ‘regulatory investigation costs’ or similar are included, and what if any limitations there are to that cover (for example, cover is only likely to be provided where a business has been required to give evidence or invited to apply for Core Participant status).

Self-financing

The legal costs of involvement in an inquiry are often very significant. The larger the Inquiry and the broader its remit, the higher those costs will inevitably be. There will be some businesses in the fortunate position of being able to afford this. There will be many others who would not be able to afford this, or at least not by themselves.

One potential solution is to join forces with other businesses in the same sector with the same or similar interests, whether this be a private arrangement or through a trade body or similar organisation. For the COVID Inquiry, we consider that, for example, care and education providers, businesses in the hospitality, travel, transport, logistics, food, retail and construction sectors will find this an attractive option.

The Inquiries Rules 2006 do make provision for this – where participants can align together in circumstances where their interests in the outcome of the inquiry are similar, and the facts they are likely to rely on in the course of it are similar, it is envisaged that all will be represented by a single recognised legal representative.

We advise businesses to which this might apply to retain control of this process as far as possible, by considering putting together their own groups and instructing legal representatives at an early stage. Such arrangements would ultimately require the approval of the inquiry Chairman, but a well thought out proposal is likely, in our opinion, to be welcomed by him or her.

If our experienced Inquiries team can help you, please make contact with us. We will be providing further sector-specific Insights into the COVID inquiry over the coming months. Please sign up to our alert service to be notified about these.

 

1Section 21 of the Inquiries Act 2005 gives the Inquiry Chairman power to require documents, witness statements and attendance to give evidence.
2The findings at a Public Inquiry can influence future civil litigation and criminal prosecutions.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.

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