law society backs in-house lawyers in landmark privilege case
13 March 2008

The Law Society of England and Wales has formally applied for permission to intervene in a closely-watched European case that has threatened the ability of in-house lawyers to claim professional privilege.

The body has written to the European Court of Justice requesting permission to speak at a forthcoming appeal during which Akzo Nobel, a Dutch chemicals group, will challenge a European ruling that drew a significant distinction between the status of in-house and external lawyers.  The case, which has united the British legal profession, concerns communications between in-house lawyers and business managers in a company under investigation by a European regulatory body.

In 2003, the British subsidiary of Akzo Nobel was raided by the European Commission’s competition arm, which removed documents that had passed between Akzo managers and in-house lawyers.

Akzo claimed the investigators were not entitled to use the documents because they were effectively summaries of discussions between a lawyer and client. Such discussions are generally accepted to have “privileged” status, which means they cannot be seized by regulators and used to build a case against a business.  The concept of privilege is designed to ensure that businesses can have free and frank discussions with their lawyers without fear that what is said will be used against them.

Akzo sued the EC over its use of the documents but lost at the European Court of First Instance (CFI) last September, which effectively said that discussions with in-house lawyers were not covered by legal privilege.

In a ruling that riled the legal profession, the CFI said in-house lawyers were too close to the businesses they work for and therefore cannot rely on the same status as external lawyers.

As well as compromising the ability of in-house lawyers to advise the businesses they work for, the ruling was seized on by lawyers who criticised the EC for questioning lawyers’ integrity. Akzo is appealing the decision at the European Court of Justice (ECJ), Europe’s highest court for business issues, later this year.

Des Hudson, chief executive of the Law Society, called its application to intervene in the case a “real step forward”.

He said: “I am confident that the Court will see the merits of allowing us to participate in this case, given the arguments we have submitted and the long-standing experience we have of privilege issues.

“It is time for the EU court to update its case law. The Society will argue that the CFI’s decision represents a threat to the right of clients to communicate openly and in confidence with their in-house lawyers, a privilege which is crucial in the business community.

“It is also crucial that all members of the profession are treated equally in this respect. The advice of all solicitors should be afforded the same level of protection.”

The ECJ will decide whether to allow the Law Society to intervene in the next few weeks. It is common for professional bodies and other interested parties that are not involved in a dispute to be given permission to speak when cases are appealed.

Michael Herman ,  http://business.timesonline.co.uk