The Counsel

Inside Counsel


By Shaharyar Nashat

General Counsel, Pfizer Pakistan

In common law jurisdictions, legal professional privilege (LPP) protects all communication between a professional legal adviser and his or her clients from being disclosed without the permission of the client. The privilege is that of the client and not that of the lawyer.

The purpose behind this legal principle is to protect an individual's ability to access the justice system by encouraging complete disclosure to legal advisers without the fear that any disclosure of those communications may prejudice the client in the future. In the corporate world, LPP is intended to promote/encourage law abiding behaviour by allowing business people to seek legal advice without running the risk that the fact of seeking advice causes them prejudice.

The common law principle of legal professional privilege is of extremely long standing. The earliest recorded instance of the principle in English case law dates from 1577 in the case of Berd v Lovelance, wherein it was ordered/directed? by the Master of Rolls that the solicitor may not be ordered or compelled in any manner to testify against his client.

The principle originated as protection for individuals when accessing the knowledge and legal resources available to a lawyer and was said to stem from the "oath and honour" of the lawyer creating a sort of special contractual relationship. It was based on the fact that the ordinary citizen could not safely navigate the complexities of the law and justice system without some assistance. However, without protection the quality of the advice would suffer as clients would be discouraged from making full disclosure to their legal representatives.

In England and Wales, the rules on legal professional privilege are set out in common law. The Civil Procedure Rules 1998, Rule 31.15 establishes a right to inspect documents in civil litigation, and provide that a party to whom a document has been disclosed (i.e. mentioned or relied upon in litigation) has a right to inspect that document (if such inspection would be proportionate given the nature of the case) except where the party making disclosure has the right to withhold such inspection. One of these rights is LPP. It is a privilege that attaches to the client (not to the lawyer) in a client-lawyer relationship. It may only, therefore, be waived by the client.

In the US, attorney-client privilege is very similar in nature to that of LPP whereby any communication between a client and his or her attorney is confidential. Although, not all states in the US treat all communication between client-attorney as privileged.

In Pakistan, article 9 of the Qanun-e-Shahadat Order, 1984 (1984 Order) prohibits advocates from disclosing communication made to them, in the course of and for the purpose of his employment as an advocate, by or on behalf of their client or to state the contents or condition of any document with which they have become acquainted in the course and for the purpose of their professional employment or to disclose any advice given by them to their client, unless otherwise expressly consented to by the client. The obligation to keep all such information confidential continues even after termination or expiry of such employment. Also, under article 12 of the 1984 Order, no person may be compelled to disclose to the Court, Tribunal or other authority exercising judicial or quasi-judicial power or jurisdiction any confidential communication which has taken place between him and his legal professional adviser. If, however, he offers himself as a witness, the Court may compel him to disclose any such communications which may be necessary in furtherance of the evidence which the party gives and no further disclosure.

The above makes it abundantly clear that any legal advice given by or communicated between a solicitor, barrister, attorney or advocate and his or her client shall be afforded protection under the concept of LPP. The question then remains over the status of protection, if any, to the legal advice and communication between an in house legal adviser and his or her client/employer.
In England as well as the US, it has been a generally accepted principle that In-house counsel can usually claim privilege over their dealings with officers of their company for the purposes of providing legal advice.

However, in the recent case of Akzo Nobel Chemicals Limited and Akcros Chemicals Limited -v- Commission of the European Communities, the European Court of Justice (ECJ) has limited the extent to which companies may be able to prevent disclosure of documents, during European Commission competition investigations, on the basis that the documents are protected by privilege. It has confirmed that communications to and from in-house lawyers, in this context, do not attract privilege. By way of background, in 2003 the European Commission, assisted by the UK Office of Fair Trading, carried out dawn raids on the UK premises of Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd, seizing a considerable number of documents. Among the documents seized were internal emails exchanged with one of Akzo's in-house lawyers, an advocate of the Netherlands Bar.  Akzo and Akcros asserted that these and certain other documents seized by the Commission were protected by legal professional privilege.  The Commission disagreed. At first instance, the General Court found that the emails in question (and the other documents at issue at the time) were not protected by privilege, relying on an ECJ decision from 1982 (AM&S Europe v Commission [1982] ECR 1575).  This was principally on the basis that, in its view, in-house lawyers lack the independence that it considered was a necessary cornerstone of privilege in the EU context because they are bound by an employment relationship with their client. Akzo and Akcros appealed but the ECJ rejected the appeals on the grounds that in house lawyers did not enjoy the same amount of independence as external lawyers. The decision has come under a great deal of criticism from the England and Wales Bar and Law Society as well as other associations of lawyers across Europe.

In Pakistan, it appears that the law extends the protection of LPP to all advocates. The Legal Practitioner and Bar Councils Act, 1973 (1973 Act) has defined ‘advocate’ as an advocate enrolled with a Bar Council constituted under the 1973 Act. Section 22 of the same requires persons desirous of practicing the profession of law in Pakistan to enroll as an advocate. Accordingly, where an in house legal adviser is enrolled as an advocate with a Bar Council constituted under the 1973 Act, the provisions of article 9 of the Qanun-e-Shahadat Order, 1984 would apply over and above any confidentiality obligations contained in the employment contract of the adviser.
However, when dealing with in house legal advisers, the situation may not always be as clear cut as above.

In-house counsels often work for their employer in more than the capacity of legal adviser. Often such other work is at times of an executive or operational nature. Communications generated in those other capacities will not raise a claim for privilege for LPP. Such privilege is only conferred on communications made between the in-house counsel and their employer or other employees of the company when the in-house counsel is acting solely in their capacity as a legal adviser.

LPP may not be claimed, for example, if in-house counsel drafts correspondence and is not acting solely in his or her capacity as legal adviser. The privilege is likely to be lost if they are acting both as legal adviser and company secretary or in some other operational role in connection with the sale of the Company’s products or services. A management report by general counsel generally would not attract LPP.

Where the in house counsel also has duties in another capacity within the corporation, it is extremely important to distinguish those other roles. In this regard, the counsel should insist on having separate titles distinguishing the legal adviser and other roles. When signing off legal documents, the in house counsel should only sign off as in-house counsel and not under their dual titles or their non-legal title. For example, in a legal communication, it would be advisable to not sign off as “General Counsel and Company Secretary”. If the non-legal title is used to sign-off a legal document this may give rise to the argument against LPP, that the document served a purpose other than the provision of legal advice.

To preserve a claim for privilege, it is imperative that in house counsels render their advice and otherwise act independently in their capacity as legal advisers. It is inevitable that there will be pressure on in house counsel (generally from employees with a vested interest in the advice), to determine a legal issue in a manner not incompatible with the commercial interests of the company.

In house counsels must have the integrity and strength to resist such pressures and act in an independent and dispassionate manner. They should be prepared to defend their advice even when it is not necessarily the advice that the commercial or marketing managers of the corporation are looking for or would like to hear. It is not always that difficult to turn what on the face of it is negative advice into positive advice. As an example, the appropriate way for in house counsel to defend a position/discourage a proposition for ? taken on what might or will be anticompetitive or predatory pricing conduct might be to advise as to how not undertaking such activity may allow the company to be shown as a model corporate citizen as compared to its competitors. Another strategy might be to advise of the likely saving in the nature of penalties and legal costs if the risk associated with the contemplated conduct is not undertaken.

One way to assist in establishing the independence of in house counsel is to include an independence clause in the in house counsel’s employment contract. Such a clause would state that the in house counsel’s ethical duties and duties to the court prevail over their duties to the client.

Linking the in house counsel’s remuneration with the performance of their business unit or the corporation as a whole through, for example, share incentive schemes, may give rise to an argument against legal privilege. It might be argued that these schemes inevitably serve as temptations that might impact on their impartiality of mind and independence both of which remain keystones in claiming LPP. It is also advisable to have in house counsels report directly to the managing director or the board of directors rather than to non-legal line management. This would assist the in house counsel to maintain their independence in being able to bypass managing superior management personnel.

The case law on this particular area has been rare and often times conflicting. It is necessary in the post-Sarbanes Oxley era that in house counsels be treated equally as their colleagues or risk alienating a large and influential segment of the legal fraternity. In house legal advisers, for their part, must remember that they are bound to behave independently as ‘Officers of the Court’ and an organ of the justice system. Protection of an individual's ability to access the justice system by encouraging complete disclosure to legal advisers can only be ensured when the ‘client’ is able to approach a legal adviser with the assurance that any disclosure of their communications shall not prejudice the client in the future.

The author is the General Counsel, Pfizer Pakistan Ltd and Wyeth Pakistan Ltd and Primary ACT Lawyer for Urology Respiratory and Women's Health for the Asia Pacific Region.