Can In-House Counsel Keep Secrets? – Lessons from Europe (DRAFT)

In Bangladesh, when a dispute arises between two parties under civil law, the court by its own motion, or either party through an application, may compel the discovery of documents necessary for the subject matter of the proceedings (section 30, Code of Civil Procedure 1908). The documents a corporate party may be required to disclose could be everything from publicly available Annual Reports to sensitive financial documents, granted that they are not subject to confidentiality agreements or statutory protections. While the US is known for having the broadest scope of ‘discovery’, courts all across the globe have been known to order  the disclosure of a broad range of documents for the purpose of resolving a dispute. Traditionally, communication between lawyers and their clients have been a part of the subset of documents that have fallen outside of the scope of this discovery provision because of legal professional privilege.

Legal Professional Privilege protects a client’s communication with their lawyers from disclosure to third parties, thereby averting the possibility of self-incrimination. The cloak of confidentiality allows clients to speak to counsel candidly and counsel to provide unfettered legal advice. Such protection has existed for centuries in the common law (e.g. Berd v Lovelace [1577] Cary 62) and is uniquely tied to the status of law as an independent profession. Lawyers have enjoyed the privilege of confidentiality because, despite owing a duty to their client, they have been required to give frank, independent advice and to facilitate the administration of justice. (Bangladesh Bar Council Canons of Professional Conduct and Etiquette, Canons 10 and 12 of Chapter 2 read together) At arm’s length, a lawyer can render advice by considering both the interests of the client and of justice. In recent years, however, the exponential increase in lawyers becoming salaried employees of major companies has stirred debate regarding their ability to render independent professional judgment. This is because such lawyers not only become part of a corporate hierarchy but have sometimes become involved in commercial decision-making and dispensing non-legal advice. Courts have thus been confronted with the question of whether the privilege of confidentiality should extend to such non-legal communication and have generally held that it shouldn’t do so. (e.g. in Australia, Seven Network Ltd v News Ltd (2005) 225 ALR 672)

This should be of growing concern in Bangladesh as multinationals now have sizable legal departments and they may be required to disclose certain communications with management in open court in the event of a civil proceeding. The question of legal professional privilege viz. in-house counsel has not been explicitly considered by the Supreme Court of Bangladesh but the example of European Union (EU) jurisprudence may be informative. This is especially as many of the multinationals operating in Bangladesh are subsidiaries of European parent companies (e.g. Unilever, British American Tobacco). Therefore, I will first outline the current position regarding legal professional privilege in Bangladesh and the EU respectively before making recommendations on how communication between in-house counsel and the officers, directors and employees of a company can be kept confidential.

Bangladesh

In Bangladesh, communication between Advocates and their clients may enjoy the privilege of confidentiality under section 126 of the Evidence Act. However, such communication must have been made to him confidentially, in his capacity as an Advocate for the client, for privilege to attach to it. While the vast majority of in-house lawyers in Bangladesh have been enrolled as Advocates during their professional careers, the question arises as to whether their employment is in their capacity as an ‘Advocate’ or otherwise. The simple answer is that they are not. Pursuant to Canon 8 of Chapter 4, an Advocate should not, as a general rule, “…be a salaried official…in connection with any such profession or business.” Thus, while practicing as an Advocate, they cannot become a salaried employee of a company. Instead, a lawyer wishing to go in-house may suspend his practicing certificate under Rule 70, The Bangladesh Legal Practitioners and Bar Council Rules, 1972. A corporate lawyer is subject to codes of conduct/ethics that are set by companies for all of their employees, as well as the terms of their individual contracts which will generally include confidentiality clauses. (See British American Tobacco’s “Standards of Business Conduct” and S.S. Shroff, “In-house Counsel and the Attorney-Client Privilege” Lex Mundi (2007)) However, whether this contractual proviso means that client-counsel communication will be shielded from court-ordered disclosure is debatable, as the European example demonstrates.

The EU

The EU does not have a harmonized regime regarding confidentiality but in the AM & S v. European Commission case, the European Court of Justice (ECJ) held that confidentiality attaches to written communication between a lawyer and client, if the communication was made “for the purposes and in the interests of the client rights of defence” and they emanate from ‘independent lawyers’ (paragraph 21, p. 1611). This was re-affirmed more recently in the Akzo Nobel v. European Commission case. Thus, in-house lawyers’ communication is not protected by confidentiality because of their economic dependence on their client and their inability to avoid conflict between their own professional obligations and the commercial aims of their employers. Moreover, they may have duties that not strictly legal in nature. However, this restrictive approach to confidentiality only applies in cross-border, European Commission competition investigations. (DLA Piper, “European Union”, Legal Professional Privilege: Global Guide, 2015) Other disputes, including national competition proceedings, provide in-house counsel greater protection. In the UK, for example, both independent and in-house counsel communication attracts confidentiality, so long as the communication relates to the performance by the lawyer of his professional duty as legal adviser to his client (see Three Rivers District Council & Ors. v. Bank of England [2004] UKHL 48). Recent decisions in Belgium and the Netherlands indicate a similar trend. (Dirk Van Gerven and Freerk Vermeulen, “Legal advice of in-house counsel protected by duty of confidentiality” Lexology, 18 June 2013)

Ensuring Privilege

The lesson from this is that when courts consider the issue of privilege, they give greatest weight to the nature of the communication between in-house counsel and client rather than the lawyer’s formal, professional status. If the dominant purpose of the communication is to furnish legal advice, it will be protected, otherwise it will not. Thus, companies that seek to have their communication with their legal department protected should endeavor to strictly distinguish the department’s legal work from their involvement in other corporate activities. A range of measures may be taken to this effect, from annotating documents with ‘this communication is privileged based on attorney-client relationship’ to restricting the dissemination of such documents to granting the department greater autonomy within the company structure, so as to enable them to exercise independent professional judgment. It also goes without saying that the confidentiality of such communication should be preserved.

On the same note, it would be appreciated if the Bangladesh Bar Council issued a guidance note, clarifying whether, and to what extent, the Canons of Professional Conduct should extend to in-house lawyers.

Leiden
Morshed