When your corporate headquarters is in Canada but 75 per cent of your corporate operations and revenue are outside of Canada, just how do you practise law?
Most general counsel act as advisors to CEOs, managing directors, division presidents and vice presidents who are running lines of businesses outside of their corporate atmosphere and in other jurisdictions such as Europe or the Americas. Where there is no corresponding in-house counsel or, in most cases, only one or two, they often advise the related foreign affiliate directly.
As businesses go global, the nature and scope of what constitutes a “privileged communication” between in-house counsel and a corporate subsidiary is being put to the test. As companies aim to stay within budgets and cut resources, in-house counsel often find themselves advising all divisions of a business on both sides of the Atlantic.
First-year law school taught us that client communications with in-house counsel are covered by solicitor-client privilege when they are made for the primary purpose of seeking or rendering legal advice. This fundamental principle is firmly routed in Canadian jurisprudence.
Several European countries, however, including France, Italy and Sweden, do not recognize a privilege between in-house counsel and their clients. Other countries such as the United Kingdom, Germany, the Netherlands and Belgium recognize a limited privilege. In Akzo Nobel Chemicals, Ltd. and Akcros Chemicals Ltd v. European Commission, the court laid out that an in-house lawyer, despite their enrollment with a bar or law society and the professional ethical obligations to which they are subject, does not enjoy the same degree of independence from their employer as a lawyer working in an external law firm does in relation to their client.
I have often found myself in a bit of an awkward situation when I am based in Canada but advising managing directors and division presidents in Germany and the U.K. After providing advice, the generic disclaimer before actually accepting my advice is, “We do things differently over here.”
Despite the issue of the advice being covered by solicitor-client privilege or not, there are often cultural barriers that have an impact on the relationship between in-house counsel and their foreign clients. Given the state of the law, however, in-house counsel who advise foreign affiliates should consider the following best practices:
Educate yourself on the privilege laws in the countries in which you have responsibility and your company has operations.
Knowledge is power. Complete regular training and education for yourself to keep yourself updated on recent developments in the jurisdictions where you operate. Counsel your business colleagues on the discoverability of internal documents that request or respond to inquiries for legal advice and the need to consult outside counsel.
Maintain good relationships with a few senior partners of external law firms where you operate. Before you advise a foreign affiliate where you are not 100% sure, phone an external law firm friend. That way, when you get the disclaimer from your foreign colleagues, you have the benefit of the doubt.
Segregate privileged documents relating to work with outside counsel from non-privileged documents to minimize risk. Limit distribution of the written communications only to those business colleagues who truly need the information.
It is often corporate practice to send an email to a business colleague but cc eight others as an FYI. Often, in-house counsel like to shorten the recipient list to only those who need to know. For day-to-day routine legal advice in those jurisdictions where the privilege may not apply to in-house counsel or is questionable, consider providing your legal advice orally and not by email.
The Akzo decision increases the challenges in-house counsel face in modern-day legal practice. Rather than risking surrendering privilege altogether, it may be best to retain external counsel on more sensitive matters to preserve privilege if absolutely necessary.