The European commission has failed to strike the right balance between the public interest and protecting the lawyer-client relationship, argues Andrew Laidlaw


Where is the confidence in confidentiality? Our private lives are becoming increasingly less private.



From ID cards and CCTV to social network websites and loyalty schemes, a huge amount of our private information is held by others. Whether this information is given voluntarily or not, we may or may not regard its possession as beneficial. Equally, the government is reviewing in various ways the need for certain private or professional relationships to remain confidential. The relationship between lawyer and client is no exception.



It is only right to debate whether such incursions are justified in the wider public interest. Many would argue that the fight against money laundering is one such justification. Whether the response to this need has been proportionate is another matter for debate.



Recent complaints about the bugging of telephone conversations between lawyers and their clients represent another area where the confidentiality of the lawyer-client relationship is being challenged. It is hard to imagine that we have arrived at a stage where the public interest argues against the need for a criminal defence solicitor to confer with his client in confidence.



In Brussels, the confidentiality of the lawyer-client relationship is also being put under scrutiny in relation to lobbying activities. The European Commission is seeking to ensure that those who lobby the commission, including lawyers, sign a register.



In doing so, they would undertake to abide by a code of conduct, the principles of which include disclosing the identity of clients and financial information about the firm's income related to such activities. As the scheme would be voluntary, it sits awkwardly with solicitors' rules, which state that disclosure can only take place where required by law or where the client gives consent.



Solicitors who do choose to register would have to refuse to act for clients who did not give such consent. The commission has yet to strike the right balance between the public interest, in improving the transparency of lobbying, and protecting the lawyer-client relationship.



Nor has the commission managed to find an acceptable solution to problems concerning legal advice given by in-house lawyers. In our jurisdiction, as in many other European jurisdictions, obligations of legal professional privilege extend to all members of the profession, whether they work in private practice or in-house.



As Lord Denning noted, salaried legal advisers are 'regarded by the law as in every respect in the same position as those who practise on their own account'. In the business world, the ability to obtain legal advice in confidence is also essential.



Yet in relation to EU antitrust investigations carried out by the commission, such a rule does not apply. Since the early 1980s, the European Court of Justice (ECJ) has held that legal professional privilege does not attach to the legal advice of in-house lawyers for the purposes of EU competition law investigations, whereas it does attach to the advice of lawyers who are external to the company in question.



This issue has come to the fore again recently in the Akzo Nobel case (joined cases T-125/03 and T-253/03, Akzo Nobel Chemicals Ltd and Akros Chemicals Ltd v Commission, 17 September 2007). While many, including individual judges at the Court of First Instance (CFI), had felt that it could be time to revisit the case law, the CFI's judgment, handed down in September 2007, did little other than restate previous case law.



This is an anomalous position for English solicitors and other European lawyers working in-house. For those in-house who are regulated and subject to the same disciplinary rules of their professional body, it is difficult to justify the argument that their advice should not be afforded a degree of confidentiality equal to that of their colleagues in private practice.



Akzo Nobel has appealed the CFI's judgment. The Law Society and a number of other organisations have applied to the ECJ for leave to intervene in the case. The ECJ now faces a prime opportunity to update its case law to safeguard the fundamental principles of many European jurisdictions and reflect modern business reality.



Besides protecting the fundamental right of a company to consult its legal advisers in confidence, there are good reasons why it is in the EU's interest, and in the public interest, to rethink its case law. In-house lawyers know their companies and their businesses. They are able to give advice on competition law issues that are timely and specific to their companies.



Following the modernisation of the EU competition law regime in 2004, enforcement was decentralised and much greater emphasis was placed on companies' self-assessment in respect of the rules. In this context, in-house lawyers should be regarded as the front line in guaranteeing companies' compliance, rather than a barrier to investigations. They should be able to give their own candid legal advice in confidence, rather than ?having to engage external lawyers to ensure that the advice will be privileged.



EU institutions should demonstrate their confidence in the EU's professions and recognise the importance to society of the confidentiality afforded to the lawyer-client relationship.



Andrew Laidlaw is deputy head of the Law Society's Brussels office