Firms may outsource legal work to guarantee privilege
Published 16/09/2010 | 05:00
IRISH banks and companies may have to outsource more of their legal work following a landmark European ruling on lawyer-client confidentiality.
On Monday the European Court of Justice (ECJ) ruled that correspondence between company executives and in-house lawyers employed by them is not privileged (confidential).
Corporations might now choose to outsource their legal advice to independent lawyers whose communications are privileged.
The ECJ, in a long-awaited decision, has ruled that in-house lawyers have no right to confidentiality over advice they give to executives in cartel investigations carried out by the European Commission -- a ruling that experts say will have a major impact on how firms reach decisions internally.
The ruling could also have potential implications for former bank executives and directors facing investigations who claim they relied on internal legal advice.
The Irish Government was one of three member states that intervened in the case and opposed moves not to extend legal professional privilege to in-house lawyers.
Last night Irish legal experts said that the outcome of the Azko Nobel case, which sprang from a 2003 dawn raid on the headquarters of the world's biggest paint maker, will have important consequences for banks and companies and the ability of in-house lawyers to have full and frank exchanges with their clients.
"The ECJ's decision in the Akzo case confirms a number of implications for companies in Ireland," said Alan McCarthy, partner in EU and competition law at A&L Goodbody Soli- citors.
Mr McCarthy, who is the author of 'Irish Competition Law: Competition Act 2002', said that following the ruling, in-house lawyers may decide to communicate any sensitive advice to their executives verbally instead of circulating their advice.