(da www.servizi-legali.it )

L'Università di Maastricht, nel final report "Evaluation of the legal framework for the free movement of lawyers", del 28 novembre 2012, approfondisce il tema dell' "in-house counsel", dedicandogli separati paragrafi (The Lawyers' Directives; Regulation on in-house practice in Member States; Growing importance of in-house lawyers; Mobility of in-house lawyers; Obstacles).

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"3.3.6 In-house Counsel

The Lawyers’ Directives

The Lawyers’ Services Directive states that any Member State may exclude lawyers who are in salaried employment of a public or private undertaking from pursuing activities relating to the representation and defence of that undertaking in legal proceedings, in so far as lawyers established in that State are not permitted to pursue those activities.(84)

The Establishment Directive introduced a subject which had not been specifically regulated before, namely the right of establishment for salaried lawyers. The Lawyers’ Establishment Directive’s aim is to remove obstacles to freedom of movement for lawyers, whether they are in salaried practice or not.(85) The Directive, however, does not overrule existing regulations in Member States that preclude lawyers from functioning in a salaried capacity.

Therefore, lawyers practising in a salaried position and who wish to continue to do so in another Member State can only establish in those Member States that also allow their own lawyers to work in a salaried position.(86)

As can be concluded from the above, the possibility to restrict salaried practice in the Lawyers’ Services Directive is limited to representation of the employer in legal proceedings, whereas the Establishment Directive does not contain this limitation.

Rules on salaried practice are especially important for lawyers working as in-house counsel.
Characteristic for an in-house lawyer is that the lawyer is in a salaried position (87), and works only for the company that employs him or her. Besides that company the in-house lawyer generally does not have a client base.(88) Lawyers can, of course, be employed by law firms as well; these are not in-house lawyers because the law firm is not their client.

Regulation on in-house practice in Member States

In most Member States in-house practice in a salaried capacity is, in principle, not allowed for lawyers. When lawyers want to practise in-house in e.g. France or Italy they should ask for suspension from the Bar (and give up their status as being a lawyer). Common reasons for this prohibition are that working in-house bares the risk of jeopardizing values like professional independence, the absence of conflicts of interests and maintaining professional secrecy/confidentiality. On the other hand, it can be argued that the in-house lawyer is not more dependent than external lawyers, as external lawyers are vulnerable to loss of mandate while in-house counsels are protected by labour law.

In nine Member States (Denmark, Germany, Ireland, Malta, The Netherlands, Portugal, Poland (for legal advisors), Spain and the UK) it is permitted to practise as in-house counsel and be a member of the Bar at the same time. In some of these countries certain conditions apply. In Germany, for example, in-house lawyers are denoted by the name Syndikusanwalt. A Syndikusanwalt is not permitted to represent its employer in legal or arbitration proceedings as a lawyer.(89) Furthermore, to be admitted to the Bar, the person must prove that his permanent employment relationship does not endanger his independence when
acting as Rechtsanwalt. (90)

In Belgium, the situation is unique. Lawyers are prohibited to work as in-house counsel. However, there is a separately organized profession of legally trained professionals who work as in-house counsel (juristes d'entreprise or bedrijfsjuristen) and enjoy professional privilege.

The in-house lawyer often has certain advantages over a non-lawyer working as in-house counsel. Which advantages these are differs across countries. Some examples of advantages are professional privilege, a right of representation and a right of litigation.

The educational and qualification requirements may be different for lawyers on the one hand and in-house counsels (who are not lawyers) on the other. An individual may often serve as an in-house counsel after obtaining a university degree in law, but without an apprenticeship and without taking a Bar exam. This is for example also the case for juristes d'entreprise in Belgium.

Growing importance of in-house lawyers
In the nineties, the role of in-house counsel in Europe was relatively limited, especially in comparison with the United States. Since the turn of the 21st century, however, the power and influence of in-house counsel in Europe has been growing, particularly in large companies. (91)

One of the interviewees remarked that, starting with the crisis in 2008, the growth of the number of company lawyers has been slowed down. Many companies have introduced halts on vacancies, or have cut back expenses on staff support services, including in-house counsel. At the same time, the crisis has contributed to a growing importance of company lawyers. The crisis increased competition for external lawyers, leading to external lawyers becoming more dependent on in-house counsels who decide on the allocation of cases to
external lawyers.

The number of lawyers that are employed as in-house counsel can be substantial in some Member States. In Scotland, for example, between a quarter and a third of solicitors are employed as in-house counsel. According to the Law Society of Scotland, the in-house sector is currently busier than ever despite the downturn. (92) In England and Wales 30,010 solicitors were employed as in-house counsel in 2011, which amounted to 25% of all solicitors with a practising certificate. (93)

The European Company Lawyers Association (ECLA) allegedly represents more than 32,000 in-house counsels on a European level. (94) It must be noted that not all these company lawyers are also lawyers in the meaning of the Lawyers’ Directives, as in many Member States lawyers are precluded from in-house practice.

Mobility of in-house lawyers

According to a publication by ECLA, the in-house counsel is accustomed to mobility, within countries but also across border. (95) Based on a survey of 63 law firms and 65 in-house legal departments, the Law Society of England and Wales concluded, in 2010, that in-house solicitors advised on deals governed by laws of other jurisdictions within and outside of the EU slightly more often than private practitioners.(96) Interviewees also stress that many inhouse lawyers are used for cross-border work.

An explanation of the cross-border mobility of in-house lawyers is that they usually are employed by big firms. Many big firms are internationally active. International activity leads to increased risks and legal complexity, increasing the need for legal services. This means that many internationally active firms employ in-house lawyers.

Just like lawyers in private practice, in-house lawyers sometimes hire or co-operate with local lawyers in cross-border cases.

Obstacles

As a result of differences in regulation of in-house counsel across Member States, lawyers working as in-house counsel may encounter a number of obstacles. This section describes four important obstacles specific to in-house lawyers.

1. Establishing in a country in which in-house practice is forbidden One implication of the provision on salaried practice in the Lawyers’ Establishment Directive is that an in-house lawyer who wishes to establish in a country in which salaried in-house practice is not allowed for lawyers, cannot make use of the Lawyers’ Establishment Directive to register with the Bar under his home title. If he establishes in the host State, he presumably cannot act as a lawyer (e.g. he cannot make use of the title) and would not be regarded as a member of the profession. (97)

Our case study shows that this obstacle may not always occur in practice. In Belgium for example this obstacle does not occur. Belgian lawyers are not permitted to work as a salaried in-house counsel. However, lawyers coming from other Member States who are allowed to practise as employees in their home Member State may retain that status when they establish in Belgium. (98)

The Dutch and French bars have also signed a protocol agreement with the Belgium institute of company lawyers in September 2010, which makes in-house practice possible for temporary secondments. The protocol states that a lawyer who has been sent on temporary secondment with a company remains a registered lawyer with the bar, and must comply with the professional rules of the bar. During the secondment, the lawyer has to sign every document with the statement ‘attorney seconded to the company’ (or likewise in other languages). Correspondence of the lawyer remains confidential. The lawyer has to comply with all bar regulations on conflicts of interest. Furthermore, the lawyer has to conduct his or her work independently; the secondment may not compromise his or her independence.

It has been remarked by two interviewees that it is mostly not an obstacle when an inhouse lawyer is not permitted to pursue activities in legal proceedings in another country, as the in-house lawyer would be inclined to work together with a local lawyer anyhow, as he usually lacks the necessary knowledge of the law and court procedures of the host country. The Prada report (99) notes that in-house lawyers are not inclined to litigate, even in their own country, in cases where they are permitted to do so, as they are not specialized enough. (100)

Although in-house lawyers cannot register with the Bar in some Member States, this does not wholly preclude in-house lawyers from working in those Member States. The Lawyers Services Directive enables in-house lawyers to provide services temporarily. Interviews show that, in practice, in-house lawyer may work for a long period of time in a host state without registering with the local Bar. In France, for example, UK solicitors work as inhouse counsel for French firms, while only being registered in the UK. (101)

The Prada report notes that large French companies have a tendency to recruit foreign lawyers (American, British or German) to key positions in the legal departments at the expense of French jurists, because of their clear status (as lawyers) and the supposedly effective protection (e.g. of confidentiality) they enjoy in their home country. (102)

2. Lawyers coming from a country in which in-house practice is forbidden

It is not clear whether article 8 of the Establishment Directive applies also to situations in which a lawyer from a Member State that prohibits in-house counsel can establish as an inhouse lawyer in a country in which that is permitted. The article only refers to regulations of the host country, not to those of the home country. Therefore, article 8 at least does not expressis verbis offer home Member States the possibility to preclude lawyers from working as in-house counsel in a host country that permits this practice. A liberal interpretation would be that article 8 permits lawyers to work as in-house counsel in host countries where that is permitted, irrespective of the rules in the home Member State. However, in practice, there are difficulties for those lawyers when in-house practice is in conflict with the professional deontological rules of the home Member State.

3. Confidentiality not protected in all Member States

Professional privilege protects the communication between lawyer and client from being disclosed. (103) An obstacle for mobility within the EU is that, although professional privilege applies to in-house counsel in some Member States (e.g. the United Kingdom, Germany, Ireland, Denmark, Portugal, Spain, The Netherlands (104)), it does not apply in most Member States. This means that an in-house lawyer coming from a Member State in which he enjoys professional privilege runs the risk that information does not stay confidential when he is involved in cross-border activities in which, or is communicating to countries where professional privilege does not apply to in-house counsel. The lack of protection of confidentiality in many countries has been identified by interviewees as the most important obstacle for in-house lawyers in the EU. The lack of protection can make in-house lawyers hesitant to communicate in writing (for example, about legal risks or about observed noncompliance) for fear that the information will be used in legal proceedings against the company. (105)

To ensure confidentiality, in-house lawyers may, in practice, communicate via an external lawyer, so that the communication is protected. This, according to an interviewee, has become common practice in competition matters. It does not only increase costs but can also lead to delays. Other ways to protect communication are exchanging information by phone only and abandoning all communication in writing. Another way could be to relocate the legal department to another country in which confidentiality of in-house lawyers is protected. (106)

Some interviewees warned that the necessity to engage an external lawyer may lead to extra costs for companies, since the costs for hiring an external lawyer are usually higher than asking advice from an in-house counsel.

In France, lawyers cannot work as in-house counsel. However, the Prada report recommended that a separate list of in-house lawyers should be kept by the Bar. Lawyers registered on this list would get some confidentiality rights, but not as comprehensive as other lawyers. (107)

4. Confidentiality not protected regarding EU competition matters
In 2010, the European Court of Justice ruled that communications between in-house counsel and their in-house client regarding EU competition matters (under European Union law) are not protected by legal professional privilege (case Akzo Nobel Chemicals Ltd. and Ak-cros Chemicals Ltd. v. European Commission). The Court reasoned that the in-house counsel, being an employee of a company, is not as independent as a lawyer outside the company.

5. Representation before the European Court not possible
In most Member States, but not in all, in-house counsel are not allowed to represent their company before courts. The question whether in-house lawyers are allowed to represent their company before the European courts was considered by the European General Court in the case Prezes Urzedu Komunikacji Elektronicznej v European Commission (Case T-226/10). The Court decided that in-house lawyers could not represent their company. The decision has been appealed to the European Court of Justice. On 6 September 2012 the ECJ confirmed the Decision of the European General Court. (108) In its decision it made reference to the Akzo Nobel case and held that a lawyer must be independent to be able to stand before the European courts, and that, therefore, the lawyer may not be in an employment relationship with his or her client.

NOTES

84 Lawyers’ Services Directive, article 6. The English version of Article 6 of the Lawyers’ Services Directive only refers to activities related to the representation of the undertaking in legal proceedings, whereas e.g. the French and German versions refer to (translated) the representation and defence of the undertaking (see annex 4).

85 Lawyers’ Establishment Directive, consideration 1.

86 Lawyers’ Establishment Directive, article 8.

87 The relationship between the in-house lawyer and the company may sometimes take the form of a medium or long-term contract for services, e.g. under the condition of exclusivity. This construction is not discussed here, because it is outside the scope of article 8 of the Lawyers’ Establishment Directive. That article is only concerned with lawyers in an employed position.

88 There are some exceptions to this rule. For example, in The Netherlands the in-house lawyer can work for third parties under some conditions. In Germany it is possible for one individual to be both an in-house lawyer (Syndikusanwalt) and a regular lawyer. In his capacity as a Syndikusanwalt, it is not possible to represent third parties (his communication is also not protected). However, in his capacity as a lawyer this is possible. The German approach is unique in Europe.

89 Art. 46 Bundesrechtsanwaltsordnung (BRAO).

90 Article 7 Nr.8 Bundesrechtsanwaltsordnung (BRAO).

91 See: David B. Wilkins, “Is the In-house Counsel Movement Going Global? A preliminary assessment of the role of internal counsel in emerging economies”, in: Wisconsin Law Review 251, 2012, p. 263; Association of Corporate Counsel, The Role of In-House Counsel: Global Distinctions, 2010, reprinted 2012. The growing importance of company lawyers has also been confirmed in the interview with the NGB.

92 According to the website of the Scottish Law Society (http://www.lawscot.org.uk/members/in-houselawyers/working-in-house, accessed 27/9/2012)

93 Law Society of England and Wales, Trends in the solicitors’ profession: Annual statistical report 2011, 2011.

94 www.ecla.org (accessed 20/8/2012).

95 Com Mannin, The profession of in-house counsel in Europe, 2001.

96 Law Society of England and Wales, Firms’ Cross-Border Work, 2010.

97 In countries without legal monopolies, such as Sweden, a lawyer can still carry out his activities (including representation activities before courts) but he may not be able to use his or her title.

98 Brussels Bar Association, Vade-mecum on the establishment in Belgium of European and non-European lawyers, § 7.2.

99 This is a French study published in 2011 which was commissioned by commissioned by the Ministry of Economy, Finance and Industry and the Ministry of Justice. One of the main subjects of the study is the position of French in-house counsel. In the course of the study all relevant institutional stakeholders have been consulted, as well as a large number of professionals. Furthermore, the researchers have made a survey of existing qualitative and quantitative studies on in-house lawyers in France. This report will be referred to below as the Prada report, after the name of the leading researcher. (Ministère de l'Économie, des Finances et de l’Industrie, Ministère de la Justice, Rapport sur certains facteurs de renforcement de la compétitivité juridique de la place de Paris, 2011 (Établi par Michel Prada, Inspecteur Général des Finances Honoraire)

100 Ministère de l'Économie, des Finances et de l’Industrie, Ministère de la Justice, Rapport sur certains facteurs de renforcement de la compétitivité juridique de la place de Paris, 2011, p. 30 (arguing that since very few in-house lawyers represent their company before Labour and Commercial courts (Prud’hommes et les Tribunaux de commerce), which they are permitted to do, in-house lawyers are generally not interested in litigation).

101 One interviewee remarked that an additional reason not to register with the local bar is the costs involved (bar fees, mandatory insurance and social security/pensions).

102 Ministère de l'Économie, des Finances et de l’Industrie, Ministère de la Justice, Rapport sur certains facteurs de renforcement de la compétitivité juridique de la place de Paris, 2011, p. 20 (the report argues that this is shown by ‘recent cases’).

103 There are differences between Member States as to who exactly professional privilege / secrecy is regulated. This report does not go into these detailed differences.

104 Source: http://www.acc.com/legalresources/quickcounsel/troicgd.cfm (accessed 21/8/2012). The situation in the Netherlands is at the moment somewhat unsure. On 28 February 2012 the court of Groningen in the Netherlands has decided that an in-house lawyer does not have a right of professional privilege. The case has been taken to the Supreme Court. The case is expected to be handled in the beginning of 2013.

105 See also Ministère de l'Économie, des Finances et de l’Industrie, Ministère de la Justice (2011), p. 20.

106 See also idem, p. 20.

107 Idem.

108 Joint cases C-422/11 P and C-423-P

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