Eu Issues Final Rule Limiting Attorney-Client Privilege

The Court of Justice of the European Union confirmed that documents prepared by inhouse lawyers are not privileged under EU rules. This approach is the reverse of what US and UK companies are familiar with.

The attorney client privilege protects communications between lawyers and their clients. The EC cannot require disclosure of privileged documents and cannot use these documents. Under established EU case law, the privilege for written communications between lawyers and clients applies if: (1) the communications are made for the purposes and in the interest of the client's rights of defense and (2) the communications emanate from independent lawyers admitted in the European Economic Area (EEA).

The Court of Justice confirmed that the requirement of independence precludes any employment relationship between the lawyer and client. Therefore, the privilege does not cover internal notes prepared by inhouse counsel unless these notes (1) merely report the text or the content of communications with external lawyers or (2) are drawn up exclusively for the purpose of seeking legal advice from external counsel.

The court's ruling is consistent with most European continental legal systems. However, it contradicts the principles applied in the United Kingdom and Ireland, the Netherlands, Greece, Poland, and Portugal as well as in the United States, where the privilege extends to communications with all lawyers.

The court also confirmed that communications with external counsel are privileged only if the counsel is admitted in one of the EEA Member States. This is also different than the US/IK position, which considers communications with external counsel admitted in other jurisdictions to be privileged.