Ethical Issues Facing In-House
Counsel in Cross-Border Environments
June 18, 2015
Who we are
Presenters: Karl Dial
Eli Burris
Casey Moore
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Attorney-Client Privilege
Privilege in the United States
 Privileges exist to encourage the disclosure of
information without fear that it will be used against you
unfairly
 Two primary privileges
 Attorney-client privilege
 Work product
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Privilege in the United States
 Attorney-Client Privilege
 Oldest privilege for confidential communications known to the
common law
 Key elements:




Communication
Where a primary purpose of the communication is in furtherance of
legal advice of assistance
Expectation of confidentiality with confidentiality preserved.
Client holds the privilege
 Somewhere between “mere presence” of legal issue and
“sole purpose”: The mere presence of a legal issue relating to
the communication is insufficient to render the communication
privileged, but legal advice also does not have to be the sole
purpose of the communication
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Work Product Doctrine
PROTECTS
PROTECTS
DISCLOSURE OF
MATERIALS
LAWYER’S WORK
PREPARED BY
AND MENTAL
CLIENT AT LAWYER’S
IMPRESSIONS IN
DIRECTION
ANTICIPATION OF
LITIGATION
WORK
PRODUCT
DOCTRINE
CAN PROTECT
INTERNAL
INVESTIGATIONS
PROTECTS
DISCUSSION
WITH CERTAIN
AGENTS, SUCH AS
EXPERTS,
ACCOUNTANTS, ETC.
IN CERTAIN
CIRCUMSTANCES
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Work Product Doctrine
 Work Product Doctrine
 Broader protection than attorney-client privilege, but more easily
pierced
 Protects documents prepared in “anticipation of litigation”
 Protects the mental processes of the attorney
 Was the document prepared or obtained because of the prospect
of litigation by or for a party, or by or for the party’s representative?
 Beware:
 Courts will determine when litigation reasonably could have been
anticipated
 Often that date triggers the obligation to institute a legal hold
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Attorney-Client Privilege Around the World
Attorney-client privilege for outside and in-house counsel
No attorney-client privilege for in-house counsel
No or very limited attorney-client privilege
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Attorney-Client: EU
 All member states in the EU recognize some form of attorneyclient privilege, but more often Legal Professional Privilege
(“LPP”)
 Belgium, Cyprus, Greece, Ireland, Malta, Netherlands, Norway,
Portugal and the UK are the only specific EU jurisdictions where
in-house counsel is routinely protected
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• Communications
with in-house
counsel are
protected;
• Obligation of
professional
secrecy protects
all legal
correspondence
between client
and lawyer
• Communications
with in-house
counsel are not
protected
Germany
• Wide protection:
legal advice
privilege and
litigation
privilege
France
England & Wales
Select EU Member States
• German
qualified lawyers
have a
professional
secrecy
obligation in
litigation,
arbitration and
regulatory
investigations
• Communications
with in-house
counsel are not
protected
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China and Japan
 China
 No privilege under the laws of the PRC.
 There is no attorney work-product protection and there is no
protection of communications between lawyers and clients on the
basis of legal professional privilege in China
 Japan
 Confidentiality is a basic obligation of lawyers
 Lawyers may refuse to answer questions or produce documents
the lawyer come to know or possess in the course of the work for
the client.
 Concept applies to in-house counsel
 U.S. courts frequently recognize the privilege
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Choice of Law
 US courts apply the “touch base” test
 If a communication originates in a foreign country and attachment
of the privilege depends on the laws of that country, the foreign
country’s law applies
 If communications “touch base” with the United States, U.S.
privilege law applies
 Touch base test:
 Courts consider several factors in determining whether
communications that touch base with the United States are
protected by the attorney-client privilege
 One critical factor is that the privilege has been claimed and not
waived
Willemijn Houdstermaatschaapij Bv v. Apollo Computer, Inc., 707 F. Supp.1429, 1448 (D. Del. 1989).
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International Discovery Issues
International Discovery for U.S. Litigation . . .
Consider:
 U.S. document preservation rules v. EU data protection
rules
 Challenges of cross border discovery
 French Blocking Statute / Hague Convention
 How they affect evidence gathering for U.S. litigation
 Practical suggestions for collecting, reviewing and
disclosing EU data in U.S. litigation
 Discovery includes all manner of electronically stored
information (“ESI”)
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International Discovery for U.S. Litigation
 U.S. litigants may request data that exists outside the U.S.
 U.S. courts frequently order discovery of information located outside
the U.S.
 Disclosure may be prohibited by the laws of another country
 Need to understand implication of non-U.S.
 Data protection laws, employment law, privacy rights, blocking
statutes and international treaties
 Can place a multi-national organization “between a rock and a hard
place”
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What about the Cloud?
 Answer: No single answer—continues to change
 In cloud, data locations are not necessarily known; servers may be
in many locations
 Data are often in many places simultaneously; many countries
may claim their laws apply
 Older agreements may be obsolete
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Discovery for U.S. Litigation Involving EU Data
 In 1995, the European Parliament passed Directive 95/46/EC on the
Protection of Individuals with Regard to the Processing of Personal
Data and on the Free Movement of Such Data (the “Directive” or the
“Privacy Directive”).
 In 2012, the General Data Protection Regulation was proposed,
taking into consideration globalization and cloud computing (to be
adopted in 2015–2016)
 Also applies to organizations based outside the EU if they process
personal data of EU residents
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Proposed Solutions: The Sedona Conference®
 Sedona Conference Three-prong approach:
 Provide safeguards to protected data by stipulations and
court orders
 Permit a reasonable timetable to ensure adequate
processing and transfer of protected data, and
 Establish a reasonable methodology to be applied for the
processing and transfer of protected data
The Sedona Conference® Framework for Analysis of Cross-Border Discovery Conflicts (2008) (available at
www.thesedonaconference.org)
Sedona Conference: International Principles on Discovery, Disclosure & Data Protection: Best Practices,
Recommendations & Principles for Addressing the Preservation Discovery of Protected Data in U.S. Litigation (EU
Edition) (12/2011)
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Recent International Discovery News
Vera v. Republic of Cuba
 Spanish bank ordered to inquire about account information for
“all branches, within and without New York State,”
 Relevant to a third-party’s execution on judgments against the
Republic of Cuba
 Court held that registering with/obtaining license from New
York Department of Financial Services = consent to general
jurisdiction in New York
 However, it may be the exception for a New York branch of a
foreign financial institution to have direct electronic access to
overseas account information
DLA Piper Insights 29 APR 2015
https://www.dlapiper.com/en/us/insights/publications/2015/04/new-york-court-orders-worldwide-discovery/
Vera v. Republic of Cuba, 40 F. Supp. 3d 367, 369 (S.D.N.Y. 2014)
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Proactive Steps: Pre-Litigation
 Broad policy addressing employee privacy expectations—
such as:
 Work e-mail may be subject to preservation/collection in litigation
 Personal communications prohibited on work e-mail
 Access to personal email prohibited on work computer
 Document retention policies limiting time for retaining ESI
 Limit access to certain foreign data not needed by U.S.
entities
 Coordination between EU employees handling
privacy obligations and legal department
overseeing U.S. litigation
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Internal Investigations
Why an internal investigation?
 Fiduciary duty to monitor and correct criminal misconduct
 Avoid indictments or reduce sanctions
 Government views of internal investigations as cooperation
 May be required (e.g., Sarbanes-Oxley Act)
 Compliance function
 Obtain facts for threatened litigation
 Independent internal investigations may be more
successful
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What to Do – Possibility of Impropriety
 Primary duty – make a reasonable inquiry to determine if
a credible basis for the allegation exists
 Begin by talking with the whistleblower (if known)
 Notify internal auditor, outside auditor, CEO, audit
committee
 Does the investigation have a valid purpose (not politics)
 Decide whether to use in-house or outside counsel to
investigate
 If committee formed – remind members
that they may retain their own counsel
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Texas Rules of Professional Conduct
 1.06 – Conflict of Interest – cannot be “materially and
directly adverse” to a client if it involves a “substantially
related matter” OR if it reasonably appears representation
will be “adversely limited”
 1.12 – Organization as Client – represent the entity
 Must take “reasonable remedial actions” when a person associated
with the organization has violated legal obligation to the organization
 4.01 – Truthfulness in Statements to Others – No false
statement or fail to disclose material fact
 4.03 – Dealing with Unrepresented Persons – Lawyer
shall not state/imply that he/she is disinterested
 SEC Rule 205.3(a) – Lawyer owes duty to organization
 Advising D&O’s/employees in course of representing issuer does not
make them clients
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“Upjohn Warning” (“Corporate Miranda Warning”)
 Attorney represents the company, not any employee
 The A-C privilege applies to the interviews and the
company reserves the right to decide what to reveal
 The fact that the conversation is privileged does not
mean that what was said/done is protected
 The company wants the employee to keep the
interview confidential
• Except not from regulators/SEC
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Common Employee Questions
Be Prepared to Answer these common questions:
1. What are the consequences if I do not participate?
2. Can I have another employee/union rep attend?
3. Do I need my own lawyer?
4. Where can I find a lawyer?
5. Can I have time to find a lawyer?
6. Will the company pay for my lawyer?
Sarah Helene Duggin, Internal Corporate Investigations: Legal Ethics, Professionalism and the Employee Interview, 2003 COLUM. BUS. L. REV. 859 (2003).
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Maintaining Privilege in Investigations
 Upjohn – employee questionnaires sent to counsel +
notes of contents were attorney-client privileged
 KBR/Halliburton – investigator’s interviews with
employees & report to counsel:
 DC Cir.: privilege applies if a significant purpose of investigation
was to obtain legal advice
 Dist. Ct. on remand:



Investigator’s factual summaries are not attorney-client privileged
Work product: Rule 26(b) allows discovery of “fact” work product if
“substantial need” shown
Ordered substantial portions of the report produced
Upjohn Co v. United States 449 US 383, 397 (1981); In re Kellogg Brown & Root, Inc., 756 F.3d 754 (DC Cir. 2014);
United States ex rel. Barko v. Halliburton Co., 2014 WL 7212881 (D.D.C. 2014).
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Internal Investigations: Ethical Issues
 General Motors ignition investigation:
 Facing potential litigation, GM hired an outside law firm to
investigate and make a report
 Court: sole purpose of report was to provide legal advice

Relying on Upjohn, subject to attorney-client privilege
 What this means
 Counsel conducting investigation
can better maintain attorney-client
privilege
 Try to avoid work product discovery
In Re: General Motors LLC, 14-MD-2543 (JMF), NYLJ 1202715543917, at *1 (SDNY, Decided January 15, 2015)
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No Agreements To Preclude Disclosure to Regulators
 KBR (April 1, 2015) – SEC’s 1st enforcement action for
confidentiality agreements that could stifle whistleblowing
process
 Required employees to sign confidentiality agreements
prohibiting communications with outside parties
 KBR agreed to pay $130,000 to settle the whistleblower
protection case
 Andrew Ceresney, the SEC's enforcement
director, said the agreements "potentially
discouraged employees from reporting
securities violations…”
http://www.sec.gov/news/pressrelease/2015-54.html
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Merci, Gratzie, Danke,
Gracias, Cпacuьa, Thank You!
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DLA Piper Team
Karl Dial
karl.dial@dlapiper.com
T +1 214 743 4555


Experienced trial lawyer and
CPA with 45 trials of complex
commercial cases over 30+
years.
Focuses on bet-the-company
business litigation, trade
secret claims, securities and
director/officer litigation,
class actions, and
professional malpractice.
www.dlapiper.com/karl_dial
Eli Burriss
Eli.Burriss@dlapiper.com
T +1 214 743 4514


Has participated in
representation of numerous
national and international
companies, both as plaintiff
and defendant, in a diverse
array of litigation matters.
Advised a major
pharmaceutical manufacturer
on products in international
markets.
www.dlapiper.com/eli_burriss
Casey Moore
Casey.Moore@dlapiper.com
T +1 214 743 4556


Has represented national and
international clients in
industries including
securities, financial services,
oil and gas, health care,
insurance, pharmaceuticals
and medical devices.
Experience litigating in
federal and state court and
before arbitration panels,
including FINRA and AAA.
www.dlapiper.com/casey_moore
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