Regulators: concerns that clients will not get proper advice

Legal privilege between lawyers and corporate clients is under serious threat in the US as a result of 'highly aggressive investigative techniques' employed by US authorities, an extensive survey revealed this month.


A poll of more than 1,200 lawyers by the Association of Corporate Counsel (ACC) found that there has been a 'marked increase' in government insistence that clients waive privilege rights before they are deemed to have 'co-operated' in an investigation.


More than half of outside counsel and almost a third of in-house counsel questioned said that a waiver of privilege was expected before they could engage in bargaining, or be eligible for favourable treatment during a government investigation. Roughly half of all investigations and inquiries experienced by respondents resulted in a privilege waiver.


The survey results have been submitted to a Congressional committee that oversees the US Department of Justice and the US Sentencing Commission.


ACC president Fred Krebs said: 'This survey underscores just how widespread and serious privilege erosion concerns are among both inside and outside counsel, as well as the negative impact they have on corporate compliance. Waiver is not a tool of last resort.'


Martyn Hopper, contentious regulatory partner at City firm Herbert Smith, added: 'This is a concern. It would be very worrying if we were to see bodies like the Financial Services Authority throwing their weight around in the same way. There are many occasions where regulators do ask for and are given privileged information in the UK, though there is not the same feeling that you will be punished for not complying.


'People will not get proper legal advice if communications are open to being disclosed to regulators under severe pressure.'