Euro ruling could extend privilege to in-house lawyers

The European Court of Justice last week gave the green light for a landmark case to proceed that could extend the scope of legal professional privilege (LPP) to in-house lawyers.

The president of the European Court of First Instance (CFI) granted interim relief in a case brought by Akzo Nobel Chemicals and Akcros Chemicals. According to Alec Burnside, a competition law partner at Linklaters‘ Brussels office, if the companies’ arguments are accepted in the CFI’s final judgment, the scope of LPP would be extended to communications between companies and their in-house lawyers.

Burnside said that LPP has been “a bone of contention” since the ruling in AM&S v Commission in 1982. “[The Court] said that the European Commission respects privilege in relation to external lawyers and those admitted to a European bar, but not in-house lawyers as they have an employee, or a master-and-servant relationship, and do not show the same level of independence and therefore don’t deserve privilege,” he said. “That was inflammatory at the time and very badly received.”

In the present case, the Commission seized and copied a number of documents during a dawn raid at Akzo’s and Akcros’s premises in February this year. The applicants argued that two sets of these documents were privileged – one drafted in preparation for seeking the companies’ external lawyers’ advice and the second set comprising drafts of the documents in the first set, plus emails between the companies and their internal lawyers. The interim order requires that both sets of documents be kept in a sealed envelope at the CFI’s registry until its final judgment in the case. In the meantime, the court has accepted that it may be timely to extend legal professional privilege to written communications between a company and its in-house lawyers.

Tony Morris, a partner in Linklaters’ competition practice in London, said that recognition of legal privilege to in-house lawyers would be “welcome and long overdue”. He also said that it could be “a most important blow for defendants’ rights”.

“It means that companies can now generate information internally for seeking outside legal advice on delicate antitrust issues with a greater expectation that they will be privileged and that Commission investigators should not be able even to give them a cursory glance to check that they are indeed privileged,” he said.