The in-house lawyer and professional privilege (EUCJ)

14 September 2010, Luxembourg. The European Union Court of Justice (EUCJ) confirmed Advocate General Kokott's opinion on whether communications with an in-house lawyer are privileged material under EU law.

As reported some months ago in In-House lawyers seem set to lose battle for professional privilege Advocate General Kokott proposed the retention of the position taken in AM & S v. Commission (Case 155/79). The Court had ruled that lawyer-client communications are confidential and cannot be demanded by the European Commission during the course of an investigation, when the lawyer is an external lawyer i.e. a lawyer not bound to his client by a contract of employment. It held that the extent of legal professional privilege is subject to two cumulative conditions: the exchange with the lawyer must be connected to the client's right of defence, and the exchange must be from 'independent lawyers' i.e. lawyers who are not bound to the client by a relationship of employment.

As regards the second condition, the Court in the present judgement observed that the requirement that a lawyer must be independent is based on a conception of the lawyer's role as collaborating in the administration of justice and as being required to provide, in full independence and in the overriding interests of the cause, such legal assistance as the client needs. The requirement of independence means the absence of an employment relationship between the lawyer and his client, so that legal professional privilege does not cover exchanges within a company or group with in-house lawyers.

The Court considered that an in-house lawyer, despite his / her enrolment with a Bar or Law Society and the fact that he is subject to the professional ethical obligations, 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 client. Notwithstanding the professional ethical obligations applicable in the present case, an in-house lawyer cannot, whatever guarantees he has in the exercise of his profession, be treated in the same way as an external lawyer, because he occupies the position of an employee which, by its very nature, does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence. Furthermore, an in-house lawyer may be required to carry out other tasks, namely, as in the present case, the task of competition law coordinator, which may have an effect on the commercial policy of the undertaking. Such functions cannot but reinforce the close ties between the lawyer and his employer.

In those circumstances, the Court holds, as a result of the in-house lawyer’s economic dependence and the close ties with his employer, that he does not enjoy a level of professional independence comparable to that of an external lawyer.

Moreover, the Court considers that that interpretation does not violate the principle of equal treatment in so far as the in-house lawyer is in fundamentally different position from external lawyers.

To read the full text of the judgement click here