Attorney-Client Privilege Across Borders: In-House Counsel
by Jordan W. Cowman and Ausra Laurusaite-Kromelis
“Never write what you can speak; never speak what you can wink,” as the sage expression goes. “And never put anything in an e-mail,” Eliot Spitzer added recently.
These admonishments ring true to in-house counsel advising multinational companies doing business in the European Union, in light of recent developments regarding privilege in EU-level regulatory cases.
Imagine that your client, a transnational corporation, conducts an extensive internal analysis to improve its global antitrust compliance program. In-house lawyers based in several countries are involved. Memoranda and e-mails containing self-critical analysis are exchanged between lawyers and company executives.
All communications are made between in-house lawyers and the client for the purpose of giving legal advice; none of it is disclosed to third parties. Thus, you can rest assured that attorney-client privilege will protect them from seizure and use as evidence against your client by, say, the European Commission in conducting an antitrust probe, right? Think again.
Erosion of Attorney-Client Privilege?
Domestically, the erosion of attorney-client privilege has been noted in the post-Enron world. Anything kept secret increasingly is viewed as a red flag to inappropriate activity. Nevertheless, the principle that attorney-client communications of both outside and in-house counsel are privileged remains intact, although diminished in recent years, in the U.S.
However, operating in overseas jurisdictions, often under conflicting regulations, subjects a company to special challenges regarding disclosure and confidentiality matters. When a U.S. company’s operations reach jurisdictions where the legal system is not based on English common law, it faces attorney-client privilege rules that are quite different. It is particularly important that in-house counsel is aware of these rules in every jurisdiction in which the company operates.
Development for In-House Lawyers
The European Court of Justice, the highest court in the EU, recently issued a highly-anticipated decision in Akzo Nobel Chemicals Ltd. and Akcros Chemicals Ltd. v. European Commission on privilege as it pertains to in-house counsel. The ECJ definitively ruled that communications between in-house counsel and their clients regarding EU competition matters are not protected by legal professional privilege (LPP), a concept similar to the U.S. attorney-client privilege.
The Akzo case arose from the February 2003 investigation by the European Commission (EC) of the alleged anti-competitive practices by Akzo Nobel N.V., a large multinational company and the world’s largest maker of paints. The EC, during a two-day dawn raid of Akzo’s UK offices, seized a number of documents, including certain e-mails exchanged between Akzo’s general manager and the company’s in-house competition counsel, a member of the Netherlands Bar.
According to the ECJ, the LPP did not apply to in-house lawyers. They do not enjoy the same degree of independence as outside lawyers, concluded the ECJ, due to their close economic ties to the company. As a result, neither bar membership nor professional ethical obligations associated with it are sufficient to make an in-house lawyer capable of dealing with conflicts of interest between professional obligations and the wishes of the client.
Lots of Moving Parts
Additional confusion arises from the fact that LPP under EU law is different than it is in many of the 27 EU member states. Not only does the approach of civil law countries differ significantly from that of the common law countries (for example, under UK law LPP applies to in-house lawyers), there is also no uniformity among the EU civil law countries regarding privilege.
Key points, then, are that (1) identical evidence receives different privilege status in parallel proceedings in various countries, and (2) while in-house privilege does not apply on the EU level, it can still be relied upon in matters involving national laws of some EU member states.
Lessons for Protecting the Privilege
When dealing with the client’s overseas offices, U.S. in-house counsel should be aware that privilege may not attach to attorney-client communications and that correspondence sent to the EU may be seized by the EU competition authorities in a regulatory probe. In a nutshell, the communications with your overseas colleagues that you thought were privileged may be a dawn raid, or a clever discovery request, away from disclosure.
To increase the likelihood that privilege is preserved, you should, among other things:
• Familiarize yourself and your client with privilege laws in all relevant jurisdictions;
• Be mindful regarding what communications are sent overseas;
• Involve outside counsel early upon discovering a potential violation of EU antitrust laws or when developing internal compliance programs; and
• Establish protocols and procedures to maximize privilege.
Finally, avoid creating unnecessary documents, and never write what you can speak (or wink)!
Jordan W. Cowman is a Partner and Ausra Laurusaite-Kromelis is an Associate at Akin Gump Strauss Hauer & Feld LLP. Their focus is international law, international public policy, cross-border matters and corporate compliance. They can be reached at firstname.lastname@example.org and email@example.com.