Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50879
companies' international inter- ests extend beyond North America. Trade with the EU, Canada's second- largest trading partner, is currently worth $55 billion a year. And it is projected to grow further should a free trade deal currently being negoti- ated go through, according to Canada's International Trade Minister Peter Van Loan. A Canada-EU joint economic study released in October 2008 shows a comprehensive economic and trade agreement could boost Canadian gross domestic product by $12 billion annu- ally, and two-way trade with Europe could increase by 20 per cent. Although the application of the ECJ decision for the purpose of Canadian in-house is limited to dealings with European counterparts and businesses, its impact is likely to increase. "However limited, though, the impact is important and Canadian counsel need to recon- sider the nature and extent of their deal- ings with in-house EU counsel," says Elharrar. "Companies with operations or business dealings in Europe would do well to establish best practices for protecting privilege in their commu- nications with European parties. For example, joint defence agreements and other situations where common interest privilege may arise should be crafted with this ruling in mind to maximize protection of privilege." In addition, due to the international nature of most EU competition cases and the fact that it is common for Canadian companies to work with EU-based counsel and vice versa, the ruling leaves Canadian companies and their in-house counsel in Europe in jeopardy, says Randy Hughes, a partner and head of the competition group at McCarthy Tétrault LLP. "Companies and their counsel need to be prudent in their communications under these circumstances." Advocates of protecting privilege say authorities' efforts to chip away at protections on communications between in-house lawyers and com- pany executives will simply drive those communications underground and off the record, which is not helpful to any parties and makes the work of corpo- rate counsel far harder. It is also important to note that in Canada communications between in-house counsel and their employers enjoy the same privilege protections as communications between lawyers in private practice and their clients only when the communications are legal in nature. If you are just dealing with business advice, there is no privilege afforded to the conversation. MacLeod says in Pritchard v. Ontario (Human Rights Commission), for example, the Supreme Court of Canada determined the process for deciding whether privi- lege exists where in-house lawyers are role in assuring that their companies comply with the law, the ECJ should be promoting — not demoting — their capacities." The Akzo Nobel decision and its implementation are a harder pill to swallow for lawyers in the United Kingdom, where solicitor-client privi- lege was a fully recognized concept just as it is in Canada and the U.S. But many other EU countries do not tradition- ally extend the same privilege to in- house lawyers. "In-house lawyers are the front-line guarantor of compliance. It is sad that while the EU strives to leg- islate for higher standards of corporate governance and risk management, the Even though the decision is not binding upon Canadian lawyers or courts, it casts a chill upon full and frank communications between in-house counsel and their clients. PASCALE ELHARRAR, BMO Financial Group involved. That process asks whether the advice is legal in nature. In this con- text, legal advice has been defined very broadly and can include both advice as to the state of the law, as well as advice regarding what should be done in a relevant legal context. In Europe, in-house counsel are still fuming about the decision. The Association of Corporate Counsel, which represents more than 26,000 in-house counsel around the world, says the decision reflects an antiquat- ed view of the in-house legal counsel and would have "the perverse effect of undermining the efficacy of corporate compliance in multinational compa- nies." When the decision was released, Susan Hackett, ACC's general counsel, said the ACC was "dismayed that the ECJ did not seize the opportunity to recognize the independent judgment and value of the in-house profession. Since in-house counsel play such a vital decision of the court, in effect, rejects this key tool in achieving this aim," Law Society of England and Wales chief executive Desmond Hudson said fol- lowing the release of the ECJ ruling. Across the Atlantic, Canadian corpo- rate counsel are counting their blessings, but still view the events in Europe with concern. "Even though the decision is not binding upon Canadian lawyers or courts, it casts a chill upon full and frank communications between in-house counsel and their clients," says Elharrar. "The European Court of Justice had an opportunity to set things right for the legal community and reverse long- standing case law that communications with in-house counsel are not protected by privilege under European law. That the ECJ did not seize it is disappointing, as the decision could serve to constrain the communications of Canadian coun- sel when they are dealing with EU in- house counsel." IH INHOUSE FEBRUARY 2011 • 41