Legal professional privilege safeguards secrecy and confidentiality in exchanges between attorneys and their clients. It is an essential aspect of the right of defence. Exactly what falls within the scope of legal professional privilege is not always clear, however, and companies should be mindful about this. This is an important issue in competition infringement proceedings, because competition authorities have wide investigation powers and can require companies to disclose a vast amount of documents. Trials are also a borderline case: if the trial documents contain correspondence between a party and their attorney, does this correspondence enter the public domain?
19.9.2019
New Case Law Reinforces Legal Professional Privilege
Johanna Lähde
In a recent ruling, Finland’s Supreme Administrative Court (SAC) considered legal professional privilege in a situation where the client had disclosed their attorney’s advice to third parties. Earlier this year, the SAC weighed legal professional privilege against the principle of openness in government activities.
SAC Found Competition Authority Had Violated Legal Professional Privilege
In its ruling KHO:2019:98, the SAC found that the Finnish Competition and Consumer Authority (FCCA) had violated legal professional privilege when investigating a bus cartel that was active in Finland from 2010 to 2015. An appendix of the FCCA’s penalty payment proposal included an email thread from a company that had participated in the cartel. One of the messages in the thread referred to a recommendation by the company’s attorney. It also included a statement by a company representative regarding the recommendation. The message was forwarded within the company as well as outside the company to another cartel participant.
The SAC stated, firstly, that the recommendation issued by the attorney was linked to the competition infringement investigated by the FCCA and was, therefore, relevant to the company’s right of defence. Whether or not the company had actually followed the recommendation or whether the law firm had issued it before or after the investigation had begun did not matter.
The SAC then assessed whether legal professional privilege applies to a message that has been forwarded to others. Under European case law, legal professional privilege protects a company’s internal correspondence, which merely repeats a legal recommendation issued by an attorney (see, e.g. Case T30/89 Hilti). According to the SAC, whether this protection also extends to a recommendation that has been disclosed to external parties was open to interpretation.
The SAC deemed that, where there is room for interpretation, precedence must be given to the right of defence of the cartel participants. In the court’s view, the company had not waived its legal professional privilege even though it had disclosed its attorney’s advice to an external cartel participant. In other words, unlike the Market Court, which was the court of first instance, the SAC found that the company was not obligated to hand over to the FCCA the part of the message that included its attorney’s advice. The SAC disregarded this part of the message when evaluating the cartel. However, the court did remark that the violation of legal professional privilege had not materially restricted the company’s ability to defend itself.
The SAC’s position on the protection of right of defence has bearing in competition infringement proceedings. Nonetheless, despite the broad interpretation of the right of defence and legal professional privilege in this case, companies should act cautiously and avoid disclosing their attorneys’ legal advice to third parties.
Legal Professional Privilege May Justify Secrecy of Official Documents
The SAC has issued two rulings that clarify the relation between legal professional privilege and the principle of openness in government activities. Official documents are generally public and can only be declared secret based on the grounds provided by law.
In an appeal against a public procurement decision (KHO:2019:10), the appellant had requested access to an attorney’s opinion attached to the decision awarding the contract. The opinion included legal advice regarding the tender procedure planned by the contracting entity.
The SAC found that the opinion was a trial document, which in principle means that the appellant had the right to access it. However, the SAC refused the appellant’s access request, invoking the confidentiality of the relationship between attorney and client. The SAC found that the attorney’s obligation of secrecy is one of the preconditions for a fair trial.
In another ruling (KHO:2019:83), the SAC assessed an access request to the National Audit Office of Finland that concerned the publicity and secrecy of a memorandum related to the investigation of the derivatives positions of a government-owned company. The memorandum included information about the positions expressed by and reviews carried out by the company’s attorneys at various stages of the proceedings.
The SAC deemed that the information was protected by the attorney’s obligation of secrecy unless the client wished to waive the obligation. The company had not done so, and wished to keep the information secret. The SAC stressed, again, that the confidentiality of the exchanges between attorney and client plays a part in ensuring a fair trial. For this reason, the court found that the legal reviews and positions expressed in the opinion were business secrets of the company, and the company was under no obligation to disclose them to third parties.
The SAC’s rulings help to clarify the relationship between the legal professional privilege and the publicity of official documents.
Johanna Lähde and Hanna Perikangas
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