Global menu

Our global pages

Close

No Legal Privilege for German Lawyers in Internal Investigations?

  • Germany
  • Litigation and dispute management

23-07-2018

With a decision dated 6 June 2018 the German Federal Constitutional Court in Karlsruhe („Court“) confirmed the position that generally German lawyers do not enjoy the application of the doctrine of legal privilege by carrying out internal investigations (“Decision”). Under German law the application of the doctrine requires a client-lawyer-relationship with a clear scope of defence in criminal proceedings.

The background of the Decision is the raid of the Jones Day’s Munich office and the seizure of documents and data supposedly related to the Volkswagen emission scandal that were undertaken by the Munich Public Prosecutor’s Office in March 2017 as part of its investigations against Audi AG, an affiliated company of Volkswagen AG. Volkswagen AG, Jones Day and several lawyers of Jones Day tried to prevent the usage of the documents and data seized by challenging the actions of the Munich Public Prosecutor’s Office before German courts including the Federal Constitutional Court in Karlsruhe. However, the Court dismissed all constitutional complaints. According to its reasoning the doctrine of privilege was not applicable at hand, because the Audi AG was neither Jones Day’s client nor was there an engagement of Jones Day related to criminal investigations in Germany (Jones Day was only engaged by Volkswagen AG regarding internal investigations), therefore, the constitutional complaint of Volkswagen AG was dismissed. Jones Day’s constitutional complaint as a law firm suffered the same fate, however, because Jones Day is neither a German nor a European entity that would be entitled to rely on German fundamental constitutional rights.

The first public reaction to the Decision in Germany seems to be that it weakens Germany as a place for internal investigations. Although this understanding might have reasonable grounds and encourages companies to carry out internal investigation without leaving any traces in the EU und in particular in Germany, the Decision could be the final call for the German legislator to take necessary actions and modernise German professional regulations for lawyers. Since 2017 a draft regulation on corporate liability drawn by four professors of law at the University of Cologne exists that deals with the doctrine of privilege. Further, even the current German federal government agreed to an initiative related to the doctrine of privilege in its coalition agreement. Nevertheless, no actions have been taken since then.

In the meantime companies should be generally fine to invoke the doctrine if there have been already criminal investigations and the company is legitimately considered to be a third party (“Nebenbeteiligung”) in the criminal proceedings. In a much earlier stage, at the beginning of internal investigations companies are advised to put a specific engagement letter with a law firm in place which should, at least, be European based; such engagement should include the precise scope of work that should be undertaken. Whether or not this engagement will unfold the application of the doctrine of privilege will have to be assessed case by case. Although a formal participation in an ongoing criminal investigations is generally not required, a future participation in the criminal proceedings as a third party (“Nebenbeteiligung”) should be likely to come into consideration. However, it should be pointed out that the Court did not make any decision whether the doctrine of privilege applies if a company fears criminal proceedings in the future and against this background engages external lawyers for internal investigations. Hopefully, the Court will not to have to decide on this, but the German legislator undertakes all necessary steps to achieve legal certainty regarding the application of the doctrine in internal investigations soon.

For more information contact

< Go back

Print Friendly and PDF
Subscribe to e-briefings