In-house lawyers still denied privilege rights

29 April 2010

In-house lawyers should not enjoy the same legal professional privilege (“LPP”) under EU law as externally employed lawyers. That is the view of Advocate General Juliane Kokott in her much awaited Opinion in the Akzo case. The Opinion was perhaps a foregone conclusion but represents a huge missed opportunity to correct an anomaly in EU law. EU law already recognises LPP as a common principle in all Member States but distinguishes between independent (external) lawyers and those who are employed by the companies to whom they are giving advice, reflecting the different legal position of in-house lawyers in the majority of Member States which do not consider them independent enough to benefit from LPP. However, for the few Member States which recognise in-house lawyers for LPP purposes, such as the UK, Ireland and the Netherlands, this represents an unjustified anomaly.

The Opinion is the penultimate step in the long-running dispute between Akzo Nobel Chemicals (“Akzo”) and Akcros Chemicals (“Akcros”), on one side, and the European Commission on the other[1]. During ‘Dawn Raid’ searches by the Commission at the companies’ premises, officials copied, inter alia, two e-mails between the general manager of Akcros and a member of Akzo’s in-house legal team, which Akzo and Akcros regarded as being covered by LPP.

Advocate General Kokott refused to overturn the existing rule that denies in-house lawyers LPP protection, even if they are enrolled as a member of a Bar or Law Society, because as salaried employees of a company they do not enjoy the same degree of independence from their employers as lawyers working in external firms do in relation to their clients. She also states that, as an employee, an in-house lawyer is economically dependent on and identifies much more strongly with that undertaking than an external lawyer would. This is why so many Member States refuse to recognise LPP for in-house lawyers.

The companies’ first appeal to the Court of First Instance (now ‘the General Court’) was dismissed last year and the Court of Justice now has the final say. The court is not required to follow the Advocate General’s Opinion, but her views will be highly influential – usually it is Advocates General who push for change in the law and the court which maintains the status quo.

Ironically, in terms of the ‘type’ of document that can benefit from LPP, English law appears to restrict documents to a greater extent than EU law. For example, under English law, summaries of legal advice made by a client tend not to benefit from privilege. A more pragmatic line may be taken under EU law. It is still open to argument whether EU or national procedural rules on privilege would apply where the OFT is enforcing EU, rather than UK, competition rules.

Some practical tips for clients and their in-house lawyers:
- manage correspondence and information by steering it through in-house lawyers to external lawyers;
- avoid making internal summaries of privileged documents; and
- have procedures in place to avoid cross-disclosure of confidential information (including business secrets) in multi-party enforcement actions.

[1] Joined cases T-125/03 and T-253/03 Akzo Nobel Chemicals and Akcros Chemicals v Commission [2007] ECR II-3253.

This insight is intended to provide general information and is not to be relied on as legal advice in specific cases. For further assistance or advice please contact: