22 February 2021 | By Marten Männis
Swiss mulling on LPP for civil proceedings
As part of the ongoing revision of civil procedure law, there have been discussions to introduce the protection of professional secrets for corporate lawyers in civil proceedings. Swiss business representatives are in favour of this proposal, stressing the importance of having legal professional privilege in international conduct, which would turn Swiss companies more competitive on a global scale.
A key argument in favour of legal professional privilege for corporate lawyers concerns international transactions. Currently, for example in the pre-trial discovery phase in common law jurisdictions, Swiss-based companies can be vulnerable to having to disclose sensitive information that can damage the business operations. This becomes increasingly evident in proceedings where the opposing party does enjoy legal professional privilege, which can put Swiss companies at an unfair disadvantage. This can also play a significant role in the decision-making process of multinational companies, whereby jurisdictions not extending legal privilege to corporate lawyers could be disregarded when deciding where to establish additional offices.
The number of jurisdictions that have recognised legal professional privilege for corporate lawyers is slowly, but surely increasing. Germany saw major developments in the past decade. There are discussions developing in France of which corporate lawyers can be optimistic about, though it is a long way from anything concrete. Common law jurisdictions such as the US and the jurisdictions in the UK have long recognised the need to extend legal privilege for in-house lawyers.
Another argument put forth in Switzerland highlights how extending legal privilege for corporate lawyers would significantly contribute to a company’s internal compliance proceedings. Legal professional privilege would enable employees of various departments to include the legal department more freely and work together when concerns are raised. It should be stressed that legal departments not only understand the company’s operations from a legal perspective, but they understand how it ties together with the business goals of a company as well. This would not be a blanket cover for companies nevertheless – if Swiss law is found to be violated, the actions are not protected under legal professional privilege corporate lawyers and could still be held accountable in the context of criminal and administrative proceedings.
Claudia Biedermann, President of Vereinigung Schweizerischer Unternehmensjuristen (VSUJ, the Association of Swiss Company Lawyers) had this to add: “An inhouse counsel privilege in civil procedure is a crucial step for Swiss companies to bring them on a more equal footing with competitors and ensure a high level of compliance.”
In short, the introduction of legal professional privilege for corporate lawyers would certainly be a net benefit for Swiss companies for both international conduct and for internal investigations. Establishing these rights would definitely make the Swiss jurisdiction more attractive on the international level and would remove disadvantages that Swiss companies currently endure in international litigation. Furthermore, adopting legal professional privilege for in-house lawyers would strengthen legal departments across Switzerland and ultimately would lead to a higher quality legal advice that Swiss companies can attain from their departments.