At the end of April 2010, I wrote here about the case of Akzo Nobel Chemicals Ltd and Akros Chemicals Ltd v. European Commission that was playing out before the Court of Justice of the European Union. To recap, many companies operating in the U.K., including many U.S. companies, were hopeful that Akzo would reverse a thirty-year-old decision in a case called AM & S. AM & S held that under European law, there is no attorney-client privilege with respect to communications with in-house lawyers.

On April 29, Advocate General Juliane Kokott issued a written opinion concluding that in cartel investigations by the European Commission, there is no privilege for employees’ communications with in-house lawyers. As Christopher Thomas, a partner at Lovells LLP in Brussels, told me at the time, while Advocate General opinions are not binding on the Court of Justice, they are usually pretty good at predicting which direction the Court of Justice will go in a case.

It turns out that Thomas was correct. On Tuesday, September 14, the European Court of Justice ruled that communications between company management and in-house lawyers are not protected by the attorney-client privilege in investigations by the European Commission. Citing AM & S, the court found, among other things, that "written communications which may be protected by legal professional privilege must be exchanged with ‘an independent lawyer, that is to say one who is not bound to his client by a relationship of employment.’" The requirement of independence, the court said, means "the absence of any employment relationship between the lawyer and his client, so that legal professional privilege does not cover exchanges within a company or group with in-house lawyers."

In-house counsel are, understandably, not pleased. London solicitor J. Daniel Fitz, former chairman of the board of the Association of Corporate Counsel, told the National Law Journal that the ruling would have "serious ramifications" for in-house attorneys and multinational businesses in Europe and elsewhere. The ACC's general counsel, Susan Hackett, added that her organization was "dismayed that the ECJ did not seize the opportunity to recognize the independent judgment and value of the in-house profession." She said that the rule set forth decades ago in the AM & S case "ignor[es] the realities of modern in-house practice."