Legal Privilege in Germany - No Comprehensive Protection of Lawyer-Client Confidentiality

In the Anglo-Saxon and US legal systems, the principle of "Legal Privilege" or "Attorney Client Privilege" applies. This attorney privilege guarantees comprehensive protection of all communication between client and attorney and also applies to in-house lawyers.

Legal privilege has its basis in procedural law. The Anglo-Saxon and US procedural rules are characterised by so-called disclosure (in the USA: discovery). According to this, the parties to the proceedings are obliged to make all documents and correspondence relevant to the dispute available to the court and the other party to the proceedings - even if this is unfavorable for their own position. Correspondence between a litigant and his attorneys is exempt from this wide obligation to submit documents. The legal privilege applies not only to correspondence with external lawyers but also to correspondence with internal in-house lawyers. The application of Legal Privilege is intended to ensure that the client and lawyer can confidentially discuss the opportunities and risks of a legal dispute without having to disclose this.

Such a comprehensive legal privilege is alien to the German legal system, and for good reason. In German civil procedural law, the parties themselves determine what facts they present and what evidence they produce. Nobody is forced to submit documents that are unfavorable for their own position. Therefore, no special privileges are required for correspondence with the legal advisors.

However, the situation is different in criminal proceedings. In principle, all requested documents must be disclosed to the investigating authorities. This also applies to correspondence between companies and lawyers. The Federal Constitutional Court recently clarified this for the VW investigations (decree of June 27, 2018 - 2 BvR 1405/17, 2 BvR 1780/17, 2 BvR 1562/17, 2 BvR 1287/17, 2 BvR 1583/17): There is no absolute protection of any communication between lawyer and client in German law. Therefore, the public prosecutor's office was allowed to evaluate the documents confiscated in a German office of a US law firm from VW from internal investigations into the exhaust scandal.

However, this does not mean that legal correspondence in Germany is completely without protection. According to Section 53 para. 1 No. 3 German Code of Criminal Procedure (Strafprozessordnung - StPO), lawyers have the right to refuse to testify. An in-house lawyer is entitled to refuse to testify if and to the extent that he is entrusted with typical legal tasks. The prohibition on confiscation in accordance with Section 97 German Code of Criminal Procedure (StPO) corresponds to the right to refuse to testify. Accordingly, records of communications of the accused which are in the custody of a lawyer entitled to refuse to testify may not be confiscated within the framework of criminal proceedings. Information which the defendant has entrusted to his lawyer is therefore protected from disclosure to the prosecution authorities. The confiscation protection for companies that formally cannot be accused in criminal proceedings exists if the company has a position similar to that of an accused person. In the opinion of the Federal Constitutional Court, such a position must be assumed if a future secondary participation (Section 444 German Code of Criminal Procedure (StPO) - secondary participation in the case of a threatened fine pursuant to Section 30 Act on regulatory Offences (Gesetz über Ordnungswidrigkeiten – OWiG)) can be considered. The protection of legal secrecy is flanked by the fundamental rights protection of the offices. These are basically inviolable according to Article 13 Constitutional Law (Grundgesetz - GG). Searches of office premises must be measured against a strict standard of proportionality.

The prohibition of confiscation according to Section 97 German Code of Criminal Procedure (StPO), however, only applies in the case of the client being the accused. The Federal Constitutional Court does not consider an extension of the confiscation protection to all client relationships independent of the position of the accused to be necessary. An expanded interpretation would lead to far-reaching protection against seizure and searches of persons covered by professional secrecy directed at this and would considerably curtail the effectiveness of criminal prosecution required by constitutional law. The Federal Constitutional Court also sees a high potential for abuse if the confiscation protection extends to all client relationships, since evidence could be deliberately transferred to the sphere of a lawyer. A company therefore does not enjoy protection against seizure if it merely fears a future investigation procedure and against this background obtains legal advice or internal investigations. A German law firm may, however, invoke Article 13 of the Constitutional Law in the event of a search of the offices. The search is then examined for its proportionality, whereby a strict standard is applied.

Conclusion: Caution is advised when awarding the investigation contract to a law firm whose head office is located outside the EU. This is because it is generally barred from invoking fundamental rights - even if German lawyers work in its German office. As a recommendation: either commission a German law firm with internal searches or store documents only outside Germany or on servers abroad!