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War of independence

The recent judgment of the ECJ in Uniwersytet Wrocławski and Poland v REA provides important clarification on the independence of in-house lawyers.

The concept of ‘independence’ in the context of in-house lawyers has caused much confusion, particularly in light of the decisions in AM&S Europe and Akzo Nobel, which are not always understood as applying only in the context of the European Commission’s investigative powers in competition law proceedings.

Clarity

Thankfully, the Court of Justice of the European Union (CJEU) has provided some welcome clarity on the concept of independence in Uniwersytet Wrocławski.

By way of background, a Polish university brought a case against the EU’s executive agency for research in a dispute over money owed to the agency (joined Cases C-515/17 P and C-561/17 P).

The lawyer representing the university had been an employee of the university for over 20 years but, some months before the case, he had left the employment of the university and established a professional practice, and it was through this professional practice that the university’s case was submitted.

Civil law contract

The lawyer continued to lecture at the university under a civil law contract and, although the contract implied no subordination of the lawyer to the dictates of the university when practising his profession through his own firm, the General Court found that, even if there was no formal employment relationship, the existence of the contract for lecturing services meant that the lawyer did not satisfy the condition of independence required by the statute of the Court of Justice of the European Union.

In a judgment delivered on 4 February 2020, the CJEU set aside the order of the General Court.

In the distance

The CJEU specified that the objective of representation by a lawyer referred to in article 19 of the statute is, above all, to protect and defend the principal’s interests acting in full independence “to ensure that legal persons are defended by a representative who is sufficiently distant from the legal person which he or she represents”.

In that context, the lawyer’s duty of independence is to be understood, not as the lack of any connection whatsoever between the lawyer and his or her client, but the lack of connections that have a manifestly detrimental effect on the capacity to carry out the task of defending the client, while acting in that client’s interests to the greatest possible extent.

In that regard, the CJEU found that lawyers who would not be considered sufficiently independent were:

• Those who had been granted extensive administrative and financial powers that place his or her function at a high executive level within the legal person he or she is representing, such that his or her status as an independent third party is compromised,
• Those who hold a high-level management position within the legal person he or she is representing, or
• Those who hold shares in, or are the president of the board of administration of the company he or she is representing.

Facts

On the facts of the case before it, the CJEU expressed the view that, not only was the lawyer not defending the interests of the university in the context of a hierarchical relationship, he was simply connected to the university by a contract for the provision of lecturing services, which could not be regarded as having a manifestly detrimental effect on his capacity to defend his client’s interests.

While not legally binding, the opinion of the advocate general in this matter (delivered on 24 September 2019) includes some very interesting observations, not only in the context of article 19 of the statute, but also in the context of legal professional privilege and the concept of ‘independent lawyer’ generally.

• The concept of independence that was provided by the CJEU in the AM&S Europe and Akzo Nobel cases was only intended to define the scope of documents covered by legal professional privilege in the context of the European Commission’s investigative powers in competition law proceedings and, in applying that interpretation to a broad array of other scenarios, the connection with the original rationale and purpose of the concept of independence was lost.
• While in AM&S and AKZO, the CJEU provided, invoking the common traditions of the member states, that the requirement of ‘independence’ is justified by the role of the lawyer “as a collaborator of the court, who is called upon to provide, in the overriding interests of justice, such legal assistance as the client needs”, acting therefore primarily in the public, general interest of justice, with that interest prevailing over the private one, this premise is no longer true. In reality, legal representation is a service provided primarily, not in the overriding interests of justice, but in the interests of a particular client.
• For the purposes of article 19 of the statute, the issue of a lawyer being employed by a legal person should be assessed on the basis of whether they meet the criteria of a ‘third-party’, which is required for a lawyer to represent the client in front of the CJEU, rather than under the heading of ‘independence’, as, while an in-house lawyer is not a ‘third party’ for the purposes of representation in front of the CJEU, this does not mean that the in-house lawyer may not be independent.
  In particular, the advocate general acknowledges that certain in-house lawyers might enjoy a considerable degree of independence, such that they qualify as third parties in substantive terms, while some individuals that technically meet the criteria of third parties are actually dependent on the client in economic or other terms, such that they should be treated as part of that legal person.

Significance

Although the decision in Uniwersytet Wrocławski is strictly about the interpretation of the statute, it clearly rebuts the view that in-house counsel can never be independent. Instead, the CJEU has clearly expressed the view that challenges to the independence of a lawyer should be limited to certain relationships where conflicts of interest are more likely to arise, and should not be pre-emptively assumed by a court.

Separately, the opinion challenges the perception of a lawyer’s role that was at the heart of CJEU decisions in AM&S and Akzo, and which may be persuasive in future CJEU cases regarding legal professional privilege in competition law.

The opinion also suggests that questions of independence may not be confined to in-house lawyers – and this is something that private practitioners should take note of where they rely solely, or mainly, on a single client.