Attorney-Client Privilege and Privacy Considerations Between US Corporations & Foreign Affiliates General Counsel Conference, Washington, D. C. October 23, 2008 Kurt G. Calia, Covington & Burling LLP
Defining the Issue • In cases involving multinational corporations, opposing counsel and government enforcement authorities may seek discovery of information created anywhere in the world: – U. S. Litigation – U. S. Enforcement Actions – Litigation and Enforcement Actions Abroad • Differing understandings of privilege lead to questions as to what types of communications involving counsel will be protected. • New E-Discovery requirements in the U. S. only add to the complexity. 2
Attorney-Client Privilege in the U. S. and Abroad • Principles Applicable in the U. S. • Principles Applicable Abroad • The Special Case of In-House Counsel • Definition of “The Client” 3
Whose Law Applies to Claims of Privilege? • In the United States: – The law can be “murky, ” “highly unpredictable, ” and variable. – The “touching base” approach predominates. – Other approaches are also followed: • “functional equivalent” approach • “bright line” approach • “immediate subordinate” approach • Restatement of Conflicts of Laws, Section 139 4
Example #1: U. S. Litigation (Federal Court) Key Facts: • Patent infringement lawsuit in the U. S. against a U. S. subsidiary of a French medical device company. • Plaintiff seeks memoranda in the possession of French parent prepared by inhouse counsel in France and distributed to French executives. • Memoranda clearly render legal advice that is not related to U. S. litigation or markets. Question: Can U. S. subsidiary successfully assert privilege? 5
Example #2: U. S. Litigation (Federal Court) Key Facts: • Plaintiff seeks documents reflecting communications between a Korean affiliate and its Korean patent attorney regarding a patent application prosecuted in Korea. • Communications reflect legal advice that is not related to U. S. litigation or markets. • Korean law does not entitle a client to invoke attorney-client privilege or work product protection with respect to such documents. Question: Can U. S. litigant successfully assert privilege? 6
Whose Law Applies to Claims of Privilege? • Recognition of the Privilege Abroad: – The E. U. applies its own law to determine whether a privilege attaches to communications, irrespective of where the communications occurred. – Nations differ as to principles of choice of law. 7
European Union Privacy Directive 95/46/EC Establishes a set of uniform provisions governing processing of “personal data” in the EU. – All EU Member States have now implemented. – Overarching purpose to protect privacy rights of persons related to “personal data” – information related to an identified or identifiable natural person or data subject. – Imposes obligations on data controllers concerning “processing” (anything from collection to destruction). – Obligation to (a) notify local privacy regulator (if applicable), and (b) comply with principles of data protection. 8
E-Discovery Considerations Fed. R. Civ. P. (in effect as of 12/1/06) – 3 general obligations: – Duty to preserve potentially relevant ESI. – Duty to investigate and confer early with opposing parties concerning ESI. – Duty to produce ESI. • Privilege issues: – Inadvertent disclosure – heightened risk and steps to recover, “claw-back, ” and limit exposure. – Effect of disclosure to experts. – E-Discovery Sanctions. 9
Practical Suggestions • Limit Distribution Of Written Advice From U. S. Counsel. • Consider Oral Communications. • Keep A Clean House: Effective And Updated Document Retention Policies. (And Follow Them. ) • Educate In-House Counsel And Management. • Retain Outside Counsel. • Select Favorable Contract Provisions. • Become Familiar With Local Law. • Lobby For Changes In The Rules Of Foreign Jurisdictions. 10
Pitfalls to Avoid • Failure to Follow Own Policies Concerning Privileged Documents and Information. • Failure To Recognize Limits Of Privileges In Foreign Countries In Which You Do Business. • Failure To Involve Outside Counsel. • Unnecessarily Broad Distribution Or Dissemination Of Written Advice From U. S. Counsel. • Failure To Demonstrate Applicability of Foreign Law (in U. S. litigation). • Failure To Translate (in U. S. litigation). • Failure to Take Steps to Preserve ESI, and to Investigate Early and Confer with Opposing Counsel. 11
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