Author: Aliya Ramji, director of legal and business strategy for Figure 1 Inc., and also was a 2016 recipient of ACC’s Top 10 30-Somethings award.
This article was published as part of ACC’s “Ask Aliya” column for lawyers who are the first legal hire at their company and need advice from an in-house lawyer who has been there before.
I am a solo general counsel working for a startup technology company. We are considering opening an office in Paris and hiring another lawyer who will work out of that office. How do I ensure that privilege is maintained in the European office?
This is an interesting question that plagues not only small businesses but also multinational companies. Most countries recognize attorney-client privilege to some degree; however, the scope of that privilege can differ significantly depending on the laws of the particular country and whether the attorney is outside counsel or in-house.
In North America, in-house counsel have privilege. When individuals within North American organizations obtain legal advice from their in-house counsel, those communications are generally shielded by solicitor-client privilege and inaccessible by third parties in litigation and investigations. This is true for legal advice but not business advice. Communications between attorneys and their clients that do not deal with legal advice are not privileged and may be subject to discovery.
In Europe, however, solicitor-client privilege between in-house lawyers employed by a business and the corporate employees of that business is not recognized. In-house counsel are not considered to be neutral and impartial due to the employer-employee relationship. The European Court of Justice has stated that an in-house lawyer's position as an employee "by its very nature, does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence." Therefore, any communications between in-house counsel and their clients is discoverable in Europe. This makes it difficult to protect the advice being given inside an organization.
To ensure privilege is maintained in Europe, your first option is to engage independent outside counsel to handle sensitive matters. Any work external lawyers prepare should be maintained separately from business documents, particularly in the legal department. If you plan to hire in-house counsel in your Paris office, determine in advance the role in-house counsel will play and what will need to be farmed out to external counsel. Perhaps your in-house counsel should maintain the day-to-day business operations while outside counsel handles larger strategic issues. This may be difficult as in-house counsel usually have the best vantage point from which to advise on strategic problems.
A second option would be to ensure all high-level strategic work is completed in North America head office in order to maintain privilege. However, there is precedent suggesting that US solicitor-client privilege may not exist if a dispute or investigation arises in European courts. Therefore, my recommendation would be to stick to the first option. European in-house lawyers should refrain from adding any input to any documents or work that the external lawyers prepare. They should also limit the circulation of the documents containing legal advice or recommendations.
Maintaining outside counsel is an expensive option for a technology startup. I highly recommend that you negotiate flat fees for the work outside counsel produces. Finally you need to work with your C-suite and board to determine whether privilege in Europe is something worthwhile to the company. If it isn’t, you may be paying a lot of money to protect information that is not worth protecting.
And remember: For all advice you give in-house — separate the business from the legal.
As in-house counsel, you know how quickly today's business landscape is changing - from cybersecurity breaches to shifting international regulations. The Association of Corporate Counsel is here to help you navigate these new challenges and opportunities.Request an exclusive compilation of fifteen of the most popular ACC Docket articles on risk managment authored by in-house counsel, for in-house counsel, and gain complimentary access to tools to do your job better, easier and faster in 2018.