New hope for in-house teams in battle for legal privilege

THE EUROPEAN Commission has promised to consider demands from in-house lawyers that their advice should enjoy legal privilege during competition investigations.

In-house lawyers have seized on the promise, which was made in a speech last month by Jonathan Faull, director of general competition policy, as a sign that their long-standing campaign to secure professional privilege is making ground.

But Faull set out a number of conditions which the lawyers would have to meet before the commission would move on the issue. These included the creation of a common code of conduct binding all EU in-house lawyers, and a contractual recognition by employers that in-house lawyers have "special status and duties".

The issue has been a thorn in the side of company lawyers in their relations with the commission since the European Court of Justice (ECJ) ruled in 1982 that privilege extended only to private practitioners.

Since then, concern has mounted that the competition directorate was viewing in-house legal departments as a rich source of incriminating evidence, despite its assurances that its policy was not to examine legal documents.

Palwinder Hare, a solicitor at BTR's legal department and a Law Society representative on the board of the European Company Lawyers Association (ECLA), said that in an investigation involving the Belgian airline Sabena, the commission relied on advice given by an in-house lawyer to justify a stiffer penalty.

"It is an ongoing initiative," said Hare. "The full extent of the problem needs to be appreciated. The denial of legal privilege denies clients freedom of choice of counsel."

The ECLA, which was set up in 1982 as a direct result of the ECJ decision, submitted its arguments in a detailed report in May. Faull described the ECLA report as "interesting" and said "a new dialogue is underway".

Philippe Marchandise, chairman of the ECLA, said: "The commission has adopted a constructive and positive attitude by taking a real interest in the topic".