The attorney-client privilege is part of the foundation on which the edifice of legal practice in the U.S. is built. Under U.S. law, communications with in-house lawyers are accorded the protection of the privilege in the same manner as communications with outside counsel (though there is often a greater burden on an in-house lawyer in invoking the privilege than there is on an outside lawyer).

The situation in the European Union is quite different. Akzo Nobel Chemicals Ltd. and Akcros Chemicals Limited vs. European Commission arose out of a dawn raid carried out by investigators of the EU Competition Commission seeking evidence of suspected price fixing. During the search at the U.K. premises of Akzo and Ackros in February 2003, the commission copied and placed in its file two e-mails exchanged between the general manager of Ackros and a member of Akzo's in-house legal department, who was admitted as a lawyer to the Netherlands Bar. Akzo brought a proceeding claiming that the documents were covered by the attorney-client privilege. The Court of First Instance rejected the claim on the ground that in-house lawyers do not enjoy a privilege. Akzo appealed to the Court of Justice.

Recently, the advocate general issued an opinion which likewise held that in-house lawyers cannot assert the privilege. The reasoning is that in-house lawyers, allegedly, are not sufficiently “independent.” The opinion stated:

Salaried in-house lawyer–notwithstanding his membership, if any, of a Bar or Law Society and the professional ethical obligations associated with such membership–does not enjoy the same degree of independence from his employer as a lawyer working in an external law firm does in relation to his clients. In most cases, enrolled in-house lawyers work exclusively, or in any event primarily, for a single 'client'–their employer–whereas a lawyer in private practice tends to have a much larger and evolving client base and to give legal advice to 'all those in need of it'. With regard to their respective degrees of independence when giving legal advice or providing representation in legal proceedings, there is therefore usually a significant difference between a lawyer in private practice or employed by a law firm, on the one hand, and an enrolled in-house lawyer, on the other. The fact that they are significantly less independent makes it more difficult for enrolled in-house lawyers to deal effectively with a conflict of interests between their professional obligations and the aims and wishes of their undertaking.

It is the role of the advocate general to propose to the Court of Justice, in complete independence, a legal solution to the cases for which they are responsible. The advocate general's opinion is not binding on the Court of Justice and the judges of the court are now beginning their deliberations in this case. However, in practice, the court often follows the opinion of the advocate general.

Not surprisingly, in-house counsel groups have been disappointed in the decision. In the words of the Association of Corporate Counsel, which submitted an amicus brief, the decision reflects “a fundamental misunderstanding of both the role and responsibilities of in-house counsel, and the impact of financial remuneration on any lawyer retained by a client to represent the client's legal interests.” Whether the decision is “right” or “wrong,” it is important for U.S. lawyers to understand that a large majority of EU countries–and many other non-common law countries–are alike in not recognizing the privilege for in-house lawyers.

The lesson for in-house counsel is clear. When dealing internationally, make certain one knows the privilege rules of the foreign countries. Otherwise there is the risk of a rude awakening if it is not until the midst of litigation that counsel learn that there are countries in which the privilege for in-house lawyers simply does not exist.

The attorney-client privilege is part of the foundation on which the edifice of legal practice in the U.S. is built. Under U.S. law, communications with in-house lawyers are accorded the protection of the privilege in the same manner as communications with outside counsel (though there is often a greater burden on an in-house lawyer in invoking the privilege than there is on an outside lawyer).

The situation in the European Union is quite different. Akzo Nobel Chemicals Ltd. and Akcros Chemicals Limited vs. European Commission arose out of a dawn raid carried out by investigators of the EU Competition Commission seeking evidence of suspected price fixing. During the search at the U.K. premises of Akzo and Ackros in February 2003, the commission copied and placed in its file two e-mails exchanged between the general manager of Ackros and a member of Akzo's in-house legal department, who was admitted as a lawyer to the Netherlands Bar. Akzo brought a proceeding claiming that the documents were covered by the attorney-client privilege. The Court of First Instance rejected the claim on the ground that in-house lawyers do not enjoy a privilege. Akzo appealed to the Court of Justice.

Recently, the advocate general issued an opinion which likewise held that in-house lawyers cannot assert the privilege. The reasoning is that in-house lawyers, allegedly, are not sufficiently “independent.” The opinion stated:

Salaried in-house lawyer–notwithstanding his membership, if any, of a Bar or Law Society and the professional ethical obligations associated with such membership–does not enjoy the same degree of independence from his employer as a lawyer working in an external law firm does in relation to his clients. In most cases, enrolled in-house lawyers work exclusively, or in any event primarily, for a single 'client'–their employer–whereas a lawyer in private practice tends to have a much larger and evolving client base and to give legal advice to 'all those in need of it'. With regard to their respective degrees of independence when giving legal advice or providing representation in legal proceedings, there is therefore usually a significant difference between a lawyer in private practice or employed by a law firm, on the one hand, and an enrolled in-house lawyer, on the other. The fact that they are significantly less independent makes it more difficult for enrolled in-house lawyers to deal effectively with a conflict of interests between their professional obligations and the aims and wishes of their undertaking.

It is the role of the advocate general to propose to the Court of Justice, in complete independence, a legal solution to the cases for which they are responsible. The advocate general's opinion is not binding on the Court of Justice and the judges of the court are now beginning their deliberations in this case. However, in practice, the court often follows the opinion of the advocate general.

Not surprisingly, in-house counsel groups have been disappointed in the decision. In the words of the Association of Corporate Counsel, which submitted an amicus brief, the decision reflects “a fundamental misunderstanding of both the role and responsibilities of in-house counsel, and the impact of financial remuneration on any lawyer retained by a client to represent the client's legal interests.” Whether the decision is “right” or “wrong,” it is important for U.S. lawyers to understand that a large majority of EU countries–and many other non-common law countries–are alike in not recognizing the privilege for in-house lawyers.

The lesson for in-house counsel is clear. When dealing internationally, make certain one knows the privilege rules of the foreign countries. Otherwise there is the risk of a rude awakening if it is not until the midst of litigation that counsel learn that there are countries in which the privilege for in-house lawyers simply does not exist.