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

2 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.

3 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”

4 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

5 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 in-house 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?

6 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?

7 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.

8 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.

9 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.

10 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.

11 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.

12