The European Court of Justice has ruled that legal professional privilege does not apply to legal advice given by in-house lawyers in EU competition law investigations.

Ruling in the Akzo Nobel case today, the ECJ said that an in-house lawyer, regardless of their membership of a law society or bar association, ‘does not enjoy the same degree of independence from his employer as a lawyer working for an external law firm does in relation to his client.’

The court held that, in reaching this decision, it had not violated the principle of equal treatment in relation to internal and external lawyers.

The court followed the opinion of advocate general Juliane Kokott, who recommended to the ECJ in May that legal privilege should not attach to companies’ internal communications with their in-house lawyers.

Law Society chief executive Desmond Hudson said: 'In-house lawyers are the frontline guarantor of compliance. It is sad that while the EU strives to legislate for higher standards of corporate governance and risk management, the decision of the court in effect rejects this key tool in achieving this aim.

'In-house lawyers are the ally of EU policy-makers, because broader societal benefits stem from companies behaving legally, ethically and well. In-house lawyers ensure such behaviour best when they know their full, frank and independent legal advice can be given in confidence.

'The court has missed its opportunity to recognise how the role of the in-house lawyer has developed since this issue was last before it. More and more companies now have in-house lawyers who make an increasingly important contribution to ensuring that the business is informed of and meets its legal and regulatory obligations.'

He added: 'I hope EU policy-makers will come to appreciate the great value that such lawyers bring to both the private and public sectors. It is in their interests to trust these lawyers to get on with their jobs and to trust their regulators to guarantee their independence and ethical behaviour.

'A solicitor is a solicitor, whether working in private practice or in commerce and industry.'