Documents and other data containing client information are transferred daily across international borders. In-house counsel and outside counsel based in the United States who deal regularly with foreign in house counsel need to be aware of two important aspects of such international communications.
First, attorney-client privilege and work product protection are uniquely American (with the exception of other common law countries) because of our system of discovery. If litigation is brought in the United States and an issue arises about privilege protection for an international communication, the tribunal dealing with the matter must engage in a choice of law analysis. If foreign law controls, often attorney-client privilege will not be recognized. See Nathan M. Crystal & Francesca Giannoni-Crystal, Using Occam’s Razor to Solve International Attorney-Client Privilege Choice of Law Issues: An Old Solution to a New Problem, forthcoming in North Carolina Journal of International Law and Commercial Regulation, volume 41.
Second, in-house counsel in other countries are generally not recognized as members of the bar because they lack professional independence due to their status as employees. As a result they do not enjoy attorney-client privilege. Also, you should remember that generally abroad you do not have work product protection. See Nathan M. Crystal & Francesca Giannoni-Crystal, Understanding Akzo Nobel: A Comparison of the Status of In-House Counsel, the Scope of the Attorney-Client Privilege, and Discovery in the U.S. and Europe, Global Jurist: Vol. 11: Iss. 1 (Topics) (2011).
In light of the risks associated with international communication, what practices should in-house and outside counsel adopt in dealing with foreign in-house counsel?
To preserve the possibility of privilege protection, it is desirable to attempt to have U.S. law govern the issue of privilege. While courts have used a number of approaches to choice of law governing attorney-client privilege, the predominant method used with international communications (at least in New York, where much such litigation occurs) is the “touch base” approach. Under this standard if the advice involves U.S. law or relates to a U.S. proceeding (disregarding the proceeding in which the claim of privilege is made), U.S. law will govern the application of the privilege. In-house counsel and outside counsel should keep in mind the touch base approach in their communications with foreign lawyers and foreign in-house counsel and attempt to have as many communications as possible meet the “touch base” standard by being with a U.S. lawyer or advice about a U.S. proceeding.
In dealing with foreign in-house counsel who are generally not admitted to the bar, it would be desirable to have the communications to the client through a U.S. admitted attorney (or at least a foreign outside counsel). See Gucci Am., Inc. v. Guess, Inc., 271 F.R.D. 58 (S.D.N.Y. 2010), in which communications made by and with a non-lawyer IP professional were subject to ACP in the U.S. because the IP professional was acting under the supervision of an in-house counsel for Gucci who was admitted in New York (as well as in Italy and Belgium). Be careful, however, it the in-house counsel is not admitted or is inactive, there may be a problem in protecting the privilege. See Gucci Am., Inc. v. Guess?, Inc. , 2011 U.S. Dist. LEXIS (S.D.N.Y. Jan. 3, 2011) (holding that communications with in-house counsel for Gucci were subject to ACP even though he was working in New Jersey, here he was not admitted, and was inactive in California). Two caveats: First, in Gucci the court upheld the privilege because there was a reasonable basis for the client to believe that the in-house counsel was an admitted lawyer. If the employer’s belief is not reasonable, the result could be opposite. Anwar v. Fairfield Greenwich Ltd, 2013 U.S. Dist. LEXIS 96721 (S.D.N.Y. 2013) could be cited for this proposition. Second, the court in Gucci was quite generous – the fact that at the time in which the non–admitted in-house counsel worked for Gucci, New York did not require registration for out-of-state in-house counsel, might have something to do with the result of the case. I note that since 2011, the registration of out-of –state in-house counsel is required (22 NYCRR 522) as it is the case in other states.
For more information, Francesca Giannoni-Crystal.
This blog is a modified extract from the following article: Nathan M. Crystal & Francesca Giannoni-Crystal, Preserving the Attorney-Client Privilege and Protecting Work Product as In-House Counsel, SC Lawyer 12 (January 2016)
