EU Court: No In-House Counsel Privilege

Highlighting the differences between American law practice and international law practice, the second-highest court in the European Union ruled today that attorney-client privilege does not apply to communications between companies and their in-house counsel.

Contending that attorney-client privilege applied, a Dutch chemical company and lawyers' groups had sought to exclude from evidence in an antitrust case documents seized in a 2003 dawn investigatory raid of Akzo Nobel's offices in Manchester in Britain, according to the International Herald Tribune and the Lawyer. However, the Court of First Instance rejected that argument, saying that there is no privilege because in-house lawyers are loyal to their companies and don't offer independent legal advice.

Akzo had argued that two types of documents were covered by attorney-client privilege: those prepared by in-house counsel in order to seek advice from external lawyers, and those prepared by in-house counsel discussing how to implement external lawyers' advice, reports Reuters.

The ruling underscores the importance of retaining outside counsel, to whom attorney-client privilege does apply, in sensitive matters concerning European companies, says Julian Joshua, a former European Commission official who is now a Howrey law firm partner in Brussels. "What's clear is that companies should take great care not to generate themselves the very dossier that the investigators will use to condemn them," he tells the Herald Tribune.

Akzo hasn't yet decided whether to appeal the ruling.