A New York federal magistrate judge recently ruled that communications between an unlicensed in-house lawyer at Citco Bank Nederland (a Dutch subsidiary of Citco Group Ltd.) and his employer were not privileged. In Anwar v. Fairfield Greenwich Ltd., an MDL related to the Bernie Madoff investment scandal, counsel for Citco Defendants instructed the in-house lawyer not to answer certain questions during his deposition, on the basis of attorney-client privilege. Plaintiffs moved to overrule the privilege objections, asserting that Dutch law does not recognize an attorney-client privilege for communications with unlicensed in-house lawyers. The Citco Defendants countered that American law governed the privilege dispute, and that under American law, their communications with the in-house lawyer were privileged even if he was unlicensed, because they had a “reasonable belief” that he was their lawyer.
U.S. Magistrate Judge Frank Maas ruled that the communications were not privileged under Dutch or American law. Judge Maas explained that under Dutch law, “there is no recognized . . . privilege for unlicensed lawyers,” and that there does not “appear to be any exception to that rule in circumstances where a client reasonably believes that its conversations are privileged.” Judge Maas recognized that under American law, there is a limited exception to the rule that attorney-client privilege applies only to licensed attorneys, where the client reasonably believes that the person with whom the communications were made was in fact an attorney. However, the exception did not apply in this instance because (1) the in-house lawyer had never been licensed in any jurisdiction, (2) there was no evidence that the in-house lawyer ever held himself out as a licensed lawyer, and (3) Dutch law requires that the employer of a licensed in-house lawyer sign a professional charter committing the employer to honor the lawyer’s independence. Given these facts, Judge Maas held that “the Citco Defendants [could not] credibly argue that they were reasonably mistaken as to the [in-house] lawyer’s licensure status.”