The Competition Appeal Tribunal (the "CAT") recently
confirmed that an in-house lawyer should only be required to give
the same form of undertaking as external counsel and solicitors,
despite this being disputed by external lawyers. This welcome
decision goes some way towards bridging the gap in equality between
the treatment of in-house and external lawyers. The gap
nevertheless remains pronounced by the different treatment of
in-house lawyers and external lawyers in the context of legal
professional privilege at the EU level.
On 25 January 2012, in the case of Telefonica UK Limited v Office
of Communications, the chairman of the CAT, Mr Justice Henderson,
gave an order in relation to the ability of an in-house solicitor
to give an undertaking in a confidentiality ring to ensure that
confidential information exchanged for the purpose of the hearing
is kept within a limited number of the parties' legal
advisors.
The exchange of sensitive information is high on the agenda of
competition authorities around the world. Confidentiality rings are
increasingly being used by companies to allow the exchange of
business-sensitive information between individuals who undertake
not to disseminate that information to their wider organisation or
anyone else, and so prevent any risk of an impact on competition.
This case highlights the increasing use of confidentiality
rings.
Mr Justice Henderson ordered that in establishing a confidentiality
ring, an in-house solicitor of Everything Everywhere
("EE") "should give the same form of undertaking as
that to be given by the parties' external counsel and
solicitors". Mr Justice Henderson found that "no good
reason... [had] been given for requiring a different form of
undertaking from EE's in-house lawyer"; that "the
in-house lawyer in question is subject to the same professional
obligations as external solicitors"; and that "given the
professional standing and experience of the EE in-house lawyer, it
would be invidious and unreasonable to require her to give
additional confidentiality undertakings that are not also required
from external lawyers".
The in-house lawyer in question is a solicitor admitted to practice
law in England and Wales who has around 25 years of experience as a
practising solicitor. In these circumstances, it was found to be
invidious and unreasonable to require her to give additional
assurances not required from external lawyers. However, the same
in-house lawyer with 25 years of experience would not be able to
assert privilege in legal advice given to her employer in EU
proceedings when her counterpart external lawyers would. The choice
of the word "invidious" by Mr Justice Henderson is a
strong one, defined by the Oxford English dictionary as meaning
"likely to arouse or incur resentment or anger in others"
or "unfairly discriminating and unjust". In-house lawyers
may indeed feel resentment, anger or that they are unfairly
discriminated against by being unable to assert privilege in EU
proceedings.
Whilst privilege in the legal advice given by in-house solicitors
is recognised at a national level in England and Wales, and in many
other national jurisdictions, it is denied at the EU level. The
European Court of Justice (the "ECJ") confirmed in Akzo
Nobel Chemicals Ltd and Akcros Chemicals Ltd v European Commission
(C-550/07P) that the advice of in-house lawyers does not attract
legal professional privilege since an in-house lawyer does not have
the same degree of independence from its employer as external
lawyers because of economic dependence and close ties with its
employer. The ECJ considered that this was the case regardless of
national professional rules, which may oblige an in-house lawyer to
comply with the same strict standards of conduct as an external
lawyer. The ECJ further found that because a large number of Member
States still exclude in-house lawyer correspondence from legal
privilege, and because in-house lawyers are often not admitted to a
Bar or Law Society in a number of Member States, the situation in
Member States had not evolved sufficiently to justify a recognition
of legal privilege in the advice given by in-house lawyers.
However, there are a number of Member States where in-house lawyers
are admitted to the same Law Society and subject to the same strict
standards of conduct as external lawyers, such as in England and
Wales. Similarly to the situation recognised by Mr Justice
Henderson in Telefonica UK Limited v Office of Communications, the
unequal treatment of in-house lawyers in these circumstances may be
said to be invidious and unreasonable. If the in-house lawyer's
questionable independence from its employer does not preclude an
in-house lawyer from giving the same undertakings as an external
solicitor when both are subject to the same professional standards
and requirements, then why should it preclude the in-house lawyer
from giving privileged legal advice in the same
circumstances?
Given the professional equivalence of in-house and external lawyers
in England and Wales, it is not surprising that in-house lawyers
here feel unfairly treated by the refusal to recognise legal
privilege at the EU level in the advice that they give. The recent
decision of the CAT, that in-house lawyers can give the same
undertakings as external lawyers, highlights the discrepancy
between the English national approach and the European approach.
Adopting a national approach to the law of privilege in European
proceedings would even out this discrepancy and allow for a
flexible approach to privilege in different Member States where
there is a varying degree of similarity between the standards
required from in-house and external lawyers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.