Privilege and the Pitfalls Associated with Cross Border Investigations
We are not in Kansas anymore…
One need only to take a leisurely drive through the countryside of continental Europe to witness the diversity that plays itself out in the everyday lives of its citizens. From language to architecture, to the meals families sit down at their table to eat, neighbouring countries are about as different as they can get from one to the next, let alone when comparing Europe to America.
With some countries in Europe being stricter than others, navigating the nuances of the law have placed many an organisation and law firm on notice that particular care needs to be taken when processing, reviewing and potentially disclosing confidential information. Equally as important as protecting personal data is the withholding of privileged communications and documents related to the attorney-client relationship. Service providers like iDiscovery Solutions (iDS), do not provide legal advice in this respect, however, creating workflows to best capture these potential pitfalls in “privilege” is what we do.
You may think you know privilege…
US privilege in the context of representing individuals and/or entities is a principle at the core of the relationship between an attorney and his or her client. To facilitate complete and truthful dialog, attorney-client privilege protects confidential communications between lawyers and their clients made for the purpose of giving or receiving legal advice. In the US, attorneys include both in-house and external legal counsel and waiver occurs when communications are disclosed to third parties. If waiver does occur, it is to the entire subject matter of the communication not just the document itself, a very important distinction when compared to most European countries. For the purposes of this analysis, the European Commission’s perspective will be applied for comparison.
As different as a Budweiser is to a Lowenbrau, EU privilege, although similar by definition, is applied in a very different way to its counterpart in the US. This is even more so when digging deeper into to the application of privilege across the Member States. The view of the Commission is that privilege applies only to written communications between lawyers and clients for the purpose of exercising the client’s rights of defence. This written legal advice further differs in that it only applies to external or outside counsel and as such the attorney must be independent, i.e. not bound by relationship of employment. Privilege also extends only to attorneys licensed to practice in one of the Member States, thus rendering advice by US legal counsel unprotected. Similar application of privilege, or slight variances of that applied by the EU generally, are typically in force when invoking the right to withhold across the various Member States and often impose an even more limited approach than that found in the US.
With such stark differences in application, US matters with an EU element must be careful not to subject potentially privileged documents as defined by US standard to EU interpretation. This is due to the fact that the jurisdiction in which the document is being sought will govern the application of confidentiality to the information being requested. Disclosing a single document to the European Commission for example can open the door to complete subject matter waiver back in the US, not a particularly happy thought.
There are some measures that can help preserve privilege in instances where differences are inherent. In some jurisdictions, it is best practice and a matter of course to state on the face of the document that it has been prepared to seek or provide legal advice at the request of the client. Label the document as “privileged” and maintain it in a file separate from business documents and preferably in the legal department. If documents are prepared at the request of outside counsel, ensure that they are forwarded to outside counsel and maintained in a file separate from business documents. These, among other best practices, are however rarely part of an organisation’s defined information governance protocol and as such, most institutions will have little recourse when particular documents are being requested.
They made me do it…
In a scenario whereby a document resides or can be accessed in a European Member State, the European Commission (The Commission) take the view that it can compel the production of information that is “available” or “within the control” of the notifying party, even if electronically stored elsewhere. This includes the production of documents associated to in-house counsel and parked outside of the EU, the rationale being that powers would be limited if institutions could just house information outside of its jurisdiction. Not complying with such a broad request simply is not an option as maximum fines could reach up to 1% of an organization’s worldwide annual revenue.
By producing what would ordinarily be deemed “privilege” in the US to the Commission, confidential information to that particular document would be waived as having been produced to a third party. Even worse, as waiver in the US is across the entire subject matter of the document, subject matter waiver would occur potentially opening up other issues that were not originally under scrutiny and protected as confidential. Fortunately, there are measures in place that can help mitigate potential pitfalls of disclosing privileged information in foreign jurisdictions.
Fed. R. Evid. 502(b) governs inadvertent disclosures of privileged documents and states that inadvertent production of privileged documents does not operate as a waiver if “the holder of the privilege or protection took reasonable steps to prevent disclosure,” and “the holder promptly took reasonable steps to rectify the error.”
The case law is not definitive on this point, and thus any disclosure involves some risk that a court could find waiver. This said, voluntary submissions to the Commission for example, would waive otherwise protected documentation, whereas submissions under compulsion would not. If an organization resists production of materials, insists that the documents must be kept confidential and stipulates it is not waiving privilege and is only disclosing under threat of sanction, a reasonable argument can be made that subject matter waiver of privilege has not occurred.
Better be on the safe side…
When considering all issues associated with matters that may have global reach, it is very important to know the jurisdictional differences when looking at the interplay between EU law and US discovery practice. From an eDiscovery perspective, simply identifying confidential documents only according to the jurisdiction of the requesting agency leaves open the potential to waive important subject matter privileges in countries that have a much broader application, like the US.
Working with an eDiscovery service provider like iDS who understand this nuance can help identify potentially privileged issues in the broadest sense of the word. This enables law firms to better assess where and when communications and documentation should be disclosed. By identifying a likely set of confidential documentation, lawyers can make the final decision to turn over material, only doing so after being compelled and/or under stipulation if there is an argument for “privilege” in one jurisdiction but not another. It is always better to be on the safe side when navigating these differences, placing law firms and end clients in the best position to meet the requirements of the requesting party while at the same time preserving all the rights of privilege, no matter where the person or organisation of interest resides.
iDiscovery Solutions is a strategic consulting, technology, and expert services firm – providing customized eDiscovery solutions from digital forensics to expert testimony for law firms and corporations across the United States and Europe.