Advisory
Litigation
Litigation
May 17, 2010
An Open Issue in Europe: Confidentiality
of Communications with In-House Lawyers
by Raymond L. Sweigart and Irene Dallas
In a recent opinion, the Advocate General of the European Court of Justice
stated that "under EU law [the legal professional privilege] applies solely
to communications between a client and an independent lawyer.” This narrower definition of lawyer-client privilege, if endorsed by the Court in its decision, creates potential confusion for large, multi-jurisdictional cases. The
decision may also threaten the long-standing application of the privilege to
in-house lawyers in the UK. Clients with business activities in Europe should
consider how to deal with the risk that this privilege may not apply to their
internal communications.
In England, parties in litigation are required to disclose all documents relevant to a dispute even if they are
adverse to their case. There are exceptions to this rule and one of the most well-established is the privilege that attaches to communications between a party and its lawyer. The legal professional privilege has
protected such confidential communications from compelled disclosure as a matter of common law since
Elizabethan times. Among several requirements for the privilege to apply, the communications in question
must be with a professional legal adviser with the sole or dominant purpose of giving or obtaining legal
advice. The principle is that a party who requires legal advice should be able to be full and frank with its
lawyer safe in the knowledge that confidentiality will be maintained.
It has also been held for some time that the legal advice privilege in England extends to advice from inhouse legal advisers directly employed by government departments or commercial companies as much
as to communications with outside barristers and solicitors in private practice. In the opinion of Lord
Denning as stated in Alfred Crompton Amusement Machines Ltd v Customs and Excise Comrs (No 2)
[1972] 2 QB 102:
... They are, no doubt, servants or agents of the employer. For that reason [the first-instance judge]
thought they were in a different position from other legal advisers who are in private practice. I do not
think this is correct. They are regarded by the law as in every respect in the same position as those
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who practice on their own account. The only difference is that they act for one client only, and not
for several clients. They must uphold the same standards of honour and etiquette. They are subject
to the same duties to their client and to the court. They must respect the same confidences. They
and their clients have the same privileges. ... I speak, of course [only] of their communications in the
capacity of legal advisers.
Ibid., at page 129.
Where the requisite relationship of lawyer and client exists, the English Court has also applied the legal
advice privilege to communications with foreign lawyers. Re Duncan, Garfield v Fay [1968] P 306. In this
case, Ormrod J (as he was at the time) stated:
There is nothing [in the previous case law on privilege] to suggest that [the judges] intended to limit
the rule to legal advisers whose names appear on the roll of Solicitors of the Supreme Court or who
are members of the English Bar. The basis of the privilege is just as apt to cover foreign legal advisers as English lawyers…….’’, . The nationality of the foreign lawyer is as irrelevant as his address for
this purpose.
Ibid., at p.311.
The Advocate General’s Opinion in Akzo Nobel Chemicals
Against this long settled state of the law in England comes the recent opinion of the Advocate General
of the European Court of Justice in Akzo Nobel Chemicals & Akcros Chemicals v European Commission
& Others, [29-Apr-10] C-550/07 P. In this case, the court was asked whether legal professional privilege
applied to a company’s communications with its in-house lawyer in a Competitions (antitrust) investigation.
The Commission had exercised a “dawn raid” search order on premises occupied by ANC in the UK, taking documents (two emails) for which privilege was then claimed. The court of first instance had found the
documents not protected by any privilege and an appeal followed.
According to the opinion of Advocate General Juliane Kokott, the interventions were proper: “the protection
of communications between a lawyer and his client (legal professional privilege) under EU law applies
solely to communications between a client and an independent lawyer.” The privilege, according to Kokott,
is directly related to the independence of the lawyer from his client. She found that facet to be missing for
an in-house lawyer, independence being designated by an absence of an employment relationship. Kokott
further opined that professional regulation cannot guarantee equal independence for an employee and it
is not appropriate to extend legal professional privilege to internal company or group communications with
enrolled in-house lawyers. She concluded by recommending that the Court of Justice dismiss the appeal.
While the full Court must yet decide the matter and Kokott's opinion is not binding, the Court's judges often
decide to follow the Advocate General's opinions. A final ruling is expected later this year.
Implications of the Opinion
The EU's narrower definition of privilege, as reflected in the Akzo case, creates the potential for confusion
in large, multi-jurisdictional cases involving lawyers from different countries. As noted above, courts in
England typically treat other European (or American) lawyers the same as English lawyers; but the reverse
is not true under current EU rules. Furthermore, the EU principle of uniformity requires similar treatment
across member states. Thus, not only may the current state of privilege in England not dictate treatment
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by other members states, the Court of Justice decision may ultimately require a change in English domestic law in this fundamental aspect.
Accordingly, while this matter is pending, clients with facilities and business activities in Europe need
to address how they should deal with the risk that legal professional privilege may not apply to their internal communications and how they can mitigate against the impact of a judgment if it is aligned with the
opinion of the Advocate General.
The only certain route to confidentiality is to seek legal advice on matters that are particularly sensitive
from outside lawyers who are members of a recognized bar in an EU member state, rather than in-house
lawyers or even outside lawyers who are not EU-qualified. It may also be sensible to limit the dissemination of sensitive information within the organization to try to avoid its inclusion in a document where the
application of the privilege may be questionable. Wider dissemination of such information may even constitute a waiver of the benefits of privilege.
Finally, as regards current English law, only communications between a lawyer and a client are privileged.
The privilege does not extend to advice given by other professionals—even if on the law—although there
are steps afoot to attempt to change this in the currently pending appeal of Prudential PLC and Prudential
(Gibraltar) Limited v. Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes),
with particular respect to accountants and tax advice. In the UK it is unlikely that such a change in the law
would be possible without a change in governing statute. Nevertheless, it is a reminder that even in
England, the Legal Professional Privilege is not without its limitations that must be carefully kept to mind
to maintain confidentiality when taking legal advice.
If you have any questions about the content of this advisory, please contact the Pillsbury attorney with
whom you regularly work or the authors below.
Raymond L. Sweigart (bio)
London
+44.20.7847.9607
[email protected]
Irene Dallas (bio)
London
+44.20.7847.9603
[email protected]
This publication is issued periodically to keep Pillsbury Winthrop Shaw Pittman LLP clients and other interested parties
informed of current legal developments that may affect or otherwise be of interest to them. The information contained herein
do not constitute legal opinion and should not be regarded as a substitute for legal advice.
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