Legal Professional Privilege and Antitrust

We are back from the break! This post covers a topic dear to lawyers and their clients: Legal Professional Privilege. In a ruling last month, the European Court of Justice clarified – some say expanded – the scope of Legal Professional Privilege, granting greater protection to the lawyer-client relationship. While the ruling did not relate to antitrust law specifically, it should also affect proceedings before antitrust regulators, including at national level.

The concept of Legal Professional Privilege (LPP) generally protects advice given by lawyers to clients, and correspondence with their clients. Its exact scope differs from country to country and sometimes even between different kinds of proceedings.

In the US, for example, LPP expands to in-house counsel, while at EU level, it only covers external lawyers admitted to practice in the EU (post-Brexit, this caused some headache for UK lawyers). But things are not quite as easy: If we take antitrust proceedings, the European Commission generally accepts a broad application of LPP (even though the express position of the EU courts might have been narrower), while the German Bundeskartellamt tends to apply LPP only to correspondence/advice given in the framework of an ongoing proceeding.

That would mean that earlier advice on antitrust compliance or the results of internal investigations would not be covered by LPP in Germany. A somewhat outrageous thought for a lawyer, and one that neither side seems to have really tested in the courts so far.

Back to the actual topic of this post: The ruling of the European Court of Justice in Orde van Vlaamse Balies. The court found that LPP basically covers all legal advice, and not only advice given in the framework of exercising one’s right of defence.

Background of the case

I will try to be short on this:

  • EU law requires “intermediaries” to report certain cross-border tax planning to the competent tax authorities. This obligation also includes lawyers, to the extent that it would not breach LPP under national law. In that case, EU Member states are obliged to take the necessary measures to require lawyers to notify other intermediaries or, if there is no other intermediary, the relevant taxpayer of their own reporting obligations.
  • The court ruled that this reporting obligation is invalid in so far as EU Member States apply it in a way that requires a lawyer covered by LPP to notify other intermediaries or a client of a reporting obligation.
  • Where it gets interesting is this: The court applies Article 7 of the Charter of Fundamental Rights of the European Union to the LPP. This Article protects “the right to respect for his or her private and family life, home and communications”. By contracts, the court does not (only) apply Article 47 of the Charter, which protects the “right to an effective remedy and to a fair trial”.
  • No big difference, one might think. But, in essence, the application of Article 7 means that all legal advice is covered by LPP (other than in what the court refers to as “exceptional situations”). If the LPP was only protected by Article 47, it would only apply in ongoing proceedings.

The consequences of the case

The judgement clarifies or potentially even expands the scope of the LPP. Lawyers and companies should not (or no longer) have to show that certain advice was given or communication was exchanged in order to exercise one’s right of defence, but simply in order to obtain legal advice from an EU lawyer – which should be easy to do in most cases where a lawyer is consulted.

As the Charter of Fundamental Rights of the European Union applies in all EU Member States and as the European Court of Justice is the highest instance in the EU’s court system, the ruling should also apply in all national antitrust proceedings and be acknowledged by all national regulators. In the example of Germany, this should make lawyers and their clients more confident to push back on requests to hand over or seize advice or communication not related to an ongoing investigation.

All settled then?

Hopefully yes, potentially no. If one wanted to push back on a broader LPP scope, one might be able to argue that the judgement in Orde van Vlaamse Balies only relates to certain notification obligations of a lawyer, i.e., situations where a lawyer is asked to pro-actively disclose information that is covered by LPP – and not to situations in which a lawyer is not required to cooperate in the production of information.

Important in practice

You might have guessed it from the way I described it: The judgement is a welcome clarification. Still, a broad scope of the LPP might not help much if advice was not given from a professional covered by LPP or if advice cannot be identified as stemming from an EU lawyer.

So, both clients and lawyers should make sure that:

  • EU lawyers are advising when it comes to EU law;
  • Communication with an EU lawyer is easily identifiable as such; and
  • In the same vein, advice stemming from an EU lawyer is easily identifiable as such advice, including when it is forwarded internally.

Photo by Flex Point