In-House Counsel Attorney-Client Privilege in the European Union

Taysen Van Itallie

On September 17, 2007,  in the case Akzo Nobel Chemicals Ltd. v. European Commission, the European Court of First Instance rejected all efforts to persuade it to modify the rule of European Union law that denies the protection of "legal professional privilege" to communications between business personnel of a company and that company's in house lawyers.

This means that, under European law, there continues to be no attorney-client or comparable privilege protecting communications between an in-house lawyer and any business personnel, or even between two in house lawyers for the same company.

The Akzo case arose out of a "dawn raid" by personnel of the European Commission, investigating a suspected violation of competition law, on the offices in England of Akzo Nobel's English subsidiary. In the course of the raid, the investigators found and seized, among other papers, copies of emails sent by the manager of that office to Akzo's in house competition lawyer, a member of the Dutch bar based in Akzo's office in the Netherlands, and the lawyer's responses. Those communications would have been protected as privileged under both English and Dutch law, but the Commission argued that they were not protected under European precedent, embodied in a 1982 decision by the European Court of Justice in a case called AM&S Europe Ltd. v European Commission. The AM&S decision stated two conditions for respecting legal professional privilege in any communication between business people and a lawyer: First, the lawyer must be "independent," which the court defined to mean not employed by his or her client. Second, the lawyer must be a member of the bar of a member country of the E.U. While the competition lawyer in the Akzo case met the second condition, he did not meet the first one. In many countries in Europe, however, notably France, lawyers employed by a company are still not permitted to be members of the bar.

The Court of First Instance, which is the court below the European Court of Justice, rejected the arguments of Akzo and a number of amici curiae that the law had evolved in many European countries since the AM&S decision in favor of respecting the confidentiality of communications between business managers and in house lawyers, and that there were compelling policy reasons why such communications should be protected by a privilege. There will likely be an appeal to the European Court of Justice asking it to change the law, but the Court of First Instance decision gives little reason to hope for any improvement.

General Counsel who have lawyers in Europe must therefore continue to assume that the European Commission will be able to read all written communications to or from in-house lawyers, except for communications with, or conveying advice given by, outside lawyers.

A number of multi-national companies have engaged in a several year effort through the U.S. Chamber for International Business to confront the EC authorities about the retrograde nature of their position on in-house counsel privilege, which is disadvantages in-house counsel's ability to advise their clients by failing to recognize the protection of legal privilege for their communications.

The Akzo decision requires us to redouble our efforts to correct what is truly an intolerable situation and one which reflects an antiquated but unfortunately deeply entrenched bias that in-house counsel lack sufficient independence to be accorded the benefit of legal privilege.

Taysen Van Itallie
Associate General Counsel
Johnson & Johnson