Elements of A-C Privilege in the US

Transcription

1 Global Dispute Resolution Challenges Global Privilege Challenges for Multi-Nationals October 2, 2013 The St. Regis Houston Houston, Texas

2 Kerry Blair Partner Houston, USA Baker & McKenzie LLP Tel: Charlene Tsang-Kao Former Deputy General Counsel Houston, USA Solvay America, Inc. David Zaslowsky Partner New York, USA Baker & McKenzie LLP Tel: Baker & McKenzie LLP

3 Agenda Attorney-Client Privilege 101 Privilege for In-House Counsel in the US The Privilege in Selected Foreign Jurisdictions Scenario for Multinational A Global Privilege Protocol with Tips 3

4 2013 Baker & McKenzie 4

5 Background on the Attorney-Client Privilege The oldest of the privileges for confidentiality known to common law. 8 Wigmore, Evidence 2290 (McNaughton rev and Cum. Supp ) Policy: to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice. (Upjohn Co. v. United States, 449 U.S. 383, 389 (1981)) 5

6 Summary: Elements of A-C Privilege in the US Attorney Client Communication Confidentiality anticipated and preserved Legal advice or assistance being the purpose of the communication 6

7 Work Product Doctrine US Law A document or tangible thing Prepared by or for a party or party representative Prepared in anticipation of litigation primarily to aid in future litigation "because of" litigation Exception for non-opinion work product if there is substantial need and unable without undue hardship to obtain the substantial equivalent of the materials by other means. 7

8 Can In-House Counsel Assert Privilege? Supreme Court first extended attorney-client privilege to in-house counsel in 1915 (United States v. Louisville & Nashville R. Co., 236 U.S. 318, 336 (1915)) Today, all US jurisdictions recognize the attorneyclient privilege for in-house counsel 8

9 A-C Privilege in the Corporate Context Role: business vs. legal See it in titles Fact specific analysis Double standard 9

10 For the Purposes of Seeking Legal Advice For the privilege to apply, in-house counsel must be acting in a legal capacity rather than business capacity. Query: does the communication primarily involve legal advice, versus business or economic or political counsel? Mere presence of in-house counsel at a meeting or mere copying of in-house counsel on a written communication does not transform the communication into one that seeks or gives legal advice Internal investigations 10

11 Suggested Practices DOs 1. Use legends on written communications: ex. Request for facts so that legal advice can be given ex. For the purpose of receiving legal advice 2. Describe the legal considerations which are involved in the subject matter 3. Be aware of the presence of unprivileged persons 4. Mind the distribution list need to know basis 5. Include confidentiality legends on s and faxes 11

12 Suggested Practices DON Ts 1. Don t write it if you don t have to 2. Don t use a non-legal title 3. Don t mix law and business in the same writing 4. Don t funnel all information through in-house counsel 12

13 2013 Baker & McKenzie 13

14 General comments about the attorney-client privilege outside US Nearly all countries recognize some form of attorneyclient privilege though not always by name In common law countries like England (U.K.) the privilege is normally based on case law In civil law countries like France the privilege is typically embodied in statutes Even former communist countries are increasingly recognizing confidentiality between attorneys and clients 14

15 Warning: For In-House Lawyers The elements of the attorney-client privilege in the United States The elements of the attorney-client privilege (if any) abroad 15

16 Akzo Nobel Decision The specific recognition of the role of in-house lawyers and the protection of communications with such lawyers was relatively more common today than when the judgment in earlier cases were handed down. Confidentiality of written communications between lawyer and client is an essential corollary to the full exercise of the rights of the defense. NEVERTHELESS, the court rejects the privilege for inhouse counsel 16

17 Alleged Lack of Independence Often more independent than outside counsel, whose livelihood depends on pleasing the client. Outside counsel are deemed far more fungible than inhouse lawyers when it comes to clients who could shop for legal advice that pleases them. Companies don t hire in-house lawyers because they wish to avoid the law but, rather, hire them to counsel compliance with the law. 17

18 Sample Laws from Around the World 18

19 Privilege in the European Union Special rules for enforcement of the European prohibition of cartels and prevention of dominant market position (EU competition law proceedings) No privilege for in-house counsel Case C-155/79, AM&S Europe Ltd. v. Commission, 1982 E.C.R Case T-125/03, T-253/03, Akzo Nobel Chemicals and Akcros Chemicals v. Commission, 2007 E.C.R. II Rationale: in-house lawyers lack independence and are subject to the instructions and interests of their company 19

20 Privilege in England Legal advice privilege analogous to US A-C privilege confidential communications between attorney and client whose dominant purpose is seeking or providing legal advice (litigation or otherwise) case law has limited privilege to cover only communications between attorney and small group of persons in company actually charged with instructing attorneys (Three Rivers (No. 5): case akin to control group test) Also, litigation privilege analogous to US work product protection confidential communications between attorney and client or attorney and third party whose dominant purpose is to be used in connection with actual or contemplated litigation Applies to in-house counsel covers only legal work, not compliance or business administration work but not for investigations (subject to Akzo Nobel decision) 20

21 Privilege in Canada Legal advice ( solicitor-client ) privilege analogous to US attorney-client privilege Also, functional equivalent of US work product protection available (for documents created for litigation purpose) Privilege applies to in-house counsel Communications must occur in the course of requesting or providing legal advice, and must be intended to remain confidential (as in US) Privilege does not extend to communications outside of role of legal counsel (as in US) Limited document discovery 21

22 Privilege in France Law recognizes a professional privilege for confidential information/communications No attorney-client privilege for in-house counsel In-house counsel (juristes d entreprise) have confidentiality obligations but only based on employee-employer relationship can be trumped by demands of governmental and investigatory bodies Outside counsel (avocats) have an obligation of absolute professional secrecy and generally cannot disclose information provided by clients cannot be trumped by demands of governmental and investigatory bodies But generally no US-style discovery in France except in criminal issues (where prosecuting authorities have investigation powers, and counsel can be called to testify against company) in civil cases, parties are free to disclose whatever information they choose to support their claims; a party can request that specific evidence be disclosed, but courts cannot order disclosure if other party refuses 22

23 Privilege in Mexico Concept of attorney-client privilege is not well developed But various laws require attorneys to keep client matters confidential General Law for Professionals provides that all professionals, including attorneys, must keep confidential any communication with their clients Federal Criminal Code contains potential penalties (including imprisonment) for attorneys who disclose client confidential information Mexican Industrial Property Law protects confidentiality of company s trade secrets and proprietary information (intellectual property) No independent attorney-client privilege for in-house counsel, per se Court generally will uphold party s (including in-house counsel s) refusal to produce documents containing, or to provide testimony regarding, confidential client matters 23

24 Privilege in Argentina All communications between a lawyer and his/her client, including documents, are protected by secreto profesional (privilege) Argentine law does not distinguish between external counsels or in-house lawyers, and therefore all of them are bound by secreto profesional. Clients only can release attorneys from the secreto profesional. Attorneys are thus entitled to invoke the privilege in order to refuse disclosure of information. The secreto profesional can be also be invoked in response to a court request but would not apply to documents prepared by the attorney if they are requested by a criminal court as part of a criminal investigation. 24

25 Privilege in Brazil The attorney-client privilege is afforded to individuals licensed to practice in Brazil (e.g. registered with the Brazilian Bar Association) There is no distinction between in-house and external counsel Covers all information disclosed to a lawyer or that the lawyer is provided in his or her capacity as legal counsel Privilege is waived if the lawyer is deemed to be engaged in criminal activities with the client (e.g., committing fraud) 25

26 Privilege in Venezuela Venezuelan regulations recognize the professional privilege. There is no distinction between in-house and external counsel. Breach of the professional privilege without fair cause may bring criminal and disciplinary sanctions. Exemptions from keeping the professional privilege: (i) To avoid or denounce the commission of a crime. (ii) Judicially accusation or complaint before the Disciplinary Court of the Bar Association. 26

27 Privilege in Peru Peruvian Constitution protects professional privilege ( secreto profesional ). There is no distinction between in-house and external counsel. The privilege is perpetual and, in case of collective legal services (Legal firms), includes all its members. Exceptions: Facultative disclosure: (a) with prior written consent of the client, or (b) if the information is required to protect the legitimate interests of the attorney against the government. Compulsory disclosure: if the client poses a risk of causing serious harm (physical or psychological injuries, or death) to any person. 27

28 Privilege in the Netherlands Advocates admitted to the Netherlands bar have a professional pledge of secrecy and general privilege of non-disclosure Privilege does not apply to in-house counsel not covered by the code of professional conduct, and therefore cannot take advantage of privilege must disclose communications with corporate employers and directors upon request; may not object to the search and seizure of evidence on employer s property; and can be called to testify against employer However, now possible for in-house counsel to be admitted to Dutch bar and have same communications privileges (including invoking privilege) as outside counsel, provided they handle legal work only and sign covenant re independence 28

29 Privilege in Germany Professional privilege (confidentiality) for outside attorney-client communications In-house counsel? debatable, but if not admitted to bar (not an unusual situation), no privilege if admitted to bar, and information is obtained in the course of providing legal advice, privilege should attach but if information obtained in course of management, accounting or other duties, no privilege in-house counsel must maintain separate offices with sole access But no US-style discovery (only limited duties to produce documents), so not necessarily critical in civil litigation context 29

30 Privilege in Austria No privilege for in-house counsel not considered professionals (Rechtsanwälte) subject to disciplinary control of the bar association privilege (Anwältsprivileg) applies only where the lawyer is independent of and not under control of the client; in-house counsel are seen as indistinguishable from the client, as part of management General duty of loyalty an employee owes to an employer, under Austrian labor law, may require in-house counsel to maintain the secrecy of conversations between it and officers, directors and employees of the company though in government criminal proceedings and civil proceedings related to financial matters (tax, securities, etc.), the duty of loyalty is trumped No US-style discovery 30

31 Privilege in Switzerland Traditionally, no privilege for in-house counsel, but new laws (eff. 1 January 2011) codify privilege: extensive debate However, information disclosed to in-house counsel may be safeguarded by principles of business secrecy (professional confidentiality) Nonetheless, Swiss courts can compel production of documents drafted by, or testimony of, in-house counsel Privilege does (did) not extend to material in client s possession External counsel liberally used No US-style discovery 31

32 Privilege in Sweden No privilege for in-house counsel Alternative method of protecting the information is to use outside counsel (advokat), provided they are members of the Swedish Bar Association No US-style discovery 32

33 Privilege in Russia Attorney-client privilege is available only for advocates, lawyers who have been admitted to the Russian Bar. However, lawyers admitted to the Bar cannot be employed by companies or law firms Since most lawyers are not admitted to the Bar, privilege-like protection is contractual vis-à-vis third parties Law firm lawyers (not advocates) must disclose information requested by regulatory or investigative state body A-C communications held at client s premises not protected 33

34 Privilege in Saudi Arabia No privilege for in-house counsel, per se though Labor Regulations do provide an employee duty not to reveal the employer s secrets For outside counsel (advocates), the Saudi Advocacy Law (Article 23) regulates the conduct of lawyers and covers what is known elsewhere as the attorney-client privilege Regulation published on 24/08/1422 H. (corresponding to Nov. 9, 2001 in the Gregorian calendar) Regulation/privilege interpreted under Islamic law (Shari ah) 34

35 Privilege in Australia Communications protected under legal professional privilege ( advice and litigation ) analogous to US attorney-client privilege Generally applies to in-house counsel same as external lawyers lawyer must be acting in legal (not commercial) capacity dominant purpose of communication must be legal factors courts have looked at to assess capacity and independence include current practicing certificate, job title, physical location within organization, separation of legal department, remuneration incentives, etc. 35

36 Privilege in Hong Kong Legal professional privilege is a constitutional and substantive common law right (with an advice privilege and a litigation privilege ) Same privilege applies to in-house counsel (acting in legal advisor capacity, relating to legal matters, etc.) No Hong Kong case decisions dealing directly with legal advice privilege in context of in-house counsel Hong Kong courts likely to consider and follow English common law authorities and principles (example: Three Rivers) 36

37 Privilege in Japan No concept of attorney-client privilege exists However, lawyers admitted in Japan (Bengoshi) and foreign law business lawyers registered in Japan (Gaikokuho Jimu Bengoshi) are statutorily obligated to hold in confidence secret information obtained during the lawyer-client relationship This confidentiality protection does not belong to client; rather, Bengoshi or Gaikokuho Jimu Bengoshi may invoke protection to avoid having to testify as a trial witness in criminal case, or having to produce documents in civil case In-house counsel entitled to invoke protection only if they possess Bengoshi or Gaikokuho Jimu Bengoshi status Also, Japanese Civil Procedure Code permits civil witness to refuse to testify regarding professional secrets, so long as these matters are still considered secrets (e.g., the trade secrets of the corporate employer) 37

38 Privilege in China Attorney-client privilege not a recognized principle under the laws of the People s Republic of China But Law of Attorneys and PRC Code of Ethics for Attorneys require attorneys to keep confidential documents and communications with a qualified lawyer (and state secrets) Attorneys can be forced to testify, or lose license or go to jail In-house counsel are viewed differently than outside qualified lawyers and have lesser confidentiality obligations and protections Foreign lawyers in China are not differentiated Law may be becoming more receptive of A-C privilege 38

39 Privilege in India Professional communications between client and lawyer made with a view to obtaining legal advice are privileged Also, legal professional privilege attaches to documents prepared in anticipation of litigation Based on Indian Evidence Act of 1972 and English precedents (relied on by Indian courts in interpreting the Evidence Act) prohibits barrister, attorney, pleader or vakil from disclosing client communications and confidences clients cannot be compelled to produce confidential communications between them and their legal professional advisor Communication must be for purpose of seeking legal advice (of employment as a lawyer ); or based on or relating to litigation or anticipated litigation or regulatory action 39

40 Privilege in India (cont d) Ambiguous issue re in-house counsel no clear statutory provision 1981 Bombay High Court case held that salaried employee who advises employer on legal questions gets same protection as other lawyers (who appear in courts of law) under Sections 126 and 129 of Evidence Act 1991 case held that in-house counsel is not an advocate for purposes of Indian Advocates Act in context of appointment of advocate or pleader to judge position 2001 Supreme Court of India case held that an advocate is one who pleads in a court of law; employee law officer in government department not entitled to register as advocate (fact-specific decision) 40

41 Privilege in India (cont d) Ambiguous issue re in-house counsel (cont d) 2002 Bombay High Court case declined to decide whether privilege applies to in-house counsel, on objection made that internal legal department person not shown to be qualified to give legal advice, i.e., not an advocate (as defined in the Advocates Act) 2009 Bombay High Court case, in context of foreign law firms setting up liaison offices in India, held the Advocates Act would extend to litigious (i.e., advocacy) and non-litigious (e.g., advisory, drafting, opinions) matters, but no express judgment rendered re in-house counsel 41

42 Map of Judicial Systems 42

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44 Scenario Part One Ajax is a publicly-traded, multinational oil company. You are a senior in-house counsel for Ajax in Houston, admitted to practice in Texas. A team of UK, French and German lawyers report to you here. Dan Brown, one of your direct reports, is a US attorney who co-heads a business group. Dan reports that Ajax and Beta, a French competitor, may have colluded on pricing for an energy product sold by his business group. Dan is eager to investigate the matter and prepare a memo describing the results. How can he minimize the risk of privilege waiver and/or discovery? You decide an internal investigation is warranted. Do you assign and supervise in-house lawyers to investigate these allegations or do you retain outside counsel? As the investigation unfolds, your internal investigators need to interview witnesses in Paris and possibly other EU countries. Your team suggests using Ajax lawyers in Paris to conduct the interviews. Would the use of IHC for the interviews put legal privilege at issue? 44

45 Scenario Part Two The internal investigation confirms that Ajax and Beta have been colluding on pricing. You give Ajax s CEO a verbal report. He wants a written one to share with the Board. What are the risks of providing the report? Ajax s chief engineer, who is your friend and mentor, hears about the alleged collusion and, during a scheduled meeting with you, wants to know what you ve learned. What are the risks to privilege of talking to him? Ajax self-reports to the DOJ and the EU s antitrust investigators. You think you are first in line to report the collusion, but you anticipate the EU investigators will still open an investigation and demand production of your EU and US inhouse counsel communications as part of a cooperation agreement. Knowing you will need to cooperate, and anticipating that civil litigation will likely follow, what additional steps can be taken to protect the privilege? 45

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47 a. A Global Privilege Protocol For each country involved, ask: What disclosure/discovery does the country require in litigation? Does it recognize the privilege concept or another form of protection from disclosure of legal communications and documents prepared by or for lawyers? Are in-house lawyers treated the same way as outside counsel? Are foreign lawyers recognized for the purposes of privilege (in each country)? When can a document be given to a third party without waiving the privilege/losing its confidentiality? Can the applicable government regulators require a privileged document be produced to them? 47

48 b. Tips Become familiar with variations in the scope of the attorney-client privilege available for in-house counsel where your company is doing business and you are advising your client(s) Train your in-house colleagues Educate your client(s) Take protective steps, balancing business realities and legal risks 48

49 c. Limit written communications ( !) Oral communications are the most secure and least expensive way to protect sensitive advice Yet, logistics of conference calls (versus s) across multiple or distant time zones can be difficult, oral communications may not be as effective as written communications (re important policies), and you might desire the clarity and protection of a written record Require destruction of written notes or advice? The tradeoffs must be evaluated 49

50 d. Communicate through local outside counsel An effective way to protect sensitive legal communications, because every jurisdiction with the privilege honors the confidentiality of communications between private practitioners and their clients But hiring outside counsel can add expense and requires in-house counsel to invest time managing counsel 50

51 d. Communicate through local outside counsel (cont d) Where litigation appears likely, hiring outside counsel becomes more essential The degree of risk must be assessed 51

52 e. Contractually avoid unfavorable forums Forum selection and choice of law clauses can be drafted to make it more likely that disputes will be litigated in jurisdictions that extend the privilege to inhouse counsel But forum selection and choice of law clauses will not protect against non-contractual civil and criminal actions in foreign jurisdictions Your licensing, distributor, vendor, employment and other contracts may provide an opportunity for preventive protection 52

53 Takeaway re Treatment of In-House Counsel Internationally Depending on the non-us jurisdiction, the attorney-client privilege may or may not extend to in-house counsel The parameters of the privilege for in-house counsel available internationally correspond with the essential elements necessary for the privilege to apply in the United States, but variations among national jurisdictions can range from minor to drastic 53

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