Are in-house counsel entitled to attorney-client privilege? Supreme Court answers

The Supreme Court on Friday clarified that in-house counsel employed by corporates/ companies are not “advocates” within the meaning of law and cannot claim the privilege protecting attorney–client communications under Section 132 of the Bharatiya Sakshya Adhiniyam (BSA) [In Re: Summoning Advocates who give legal opinion or represent parties during investigation of cases or related issues]. .A Bench of Chief Justice of India BR Gavai, Justices K Vinod Chandran and NV Anjaria held that the statutory protection of attorney-client privilege under Section 132 applies only to advocates engaged in the practice of law and not to company-employed legal advisors.“In-house counsel will not be entitled to the privilege under Section 132 since they are not Advocates practising in Courts as spoken of in the BSA,” the Bench said.It made the observation in a judgement delivered today on a suo motu matter concerning the summoning of lawyers by investigating agencies for information about their clients. .General Counsels Association of India had filed an intervention application in the matter which argued that in-house lawyers should also enjoy the same confidentiality protection as independent advocates. The association contended that corporate lawyers perform identical legal advisory functions and should be treated alike under law.The Court referred to Rule 49 of the Bar Council of India Rules under the Advocates Act, 1961, which bars full-time salaried employees from practising as advocates. The Court relied on the recent Constitution Bench ruling in Rejanish KV v. K Deepa, which reaffirmed that a person who takes up regular employment ceases to be entitled to practise as an advocate.“Whether, in his employment, an in-house counsel advises his employer on legal affairs would not bring an in-house counsel, a fully salaried employee, within the definition of an Advocate,” the Bench noted. The Court observed that independence is central to the legal profession and that in-house counsel, being part of a company’s management structure, do not possess that independence.“An in-house counsel, though engaged in the job of advising his employer on questions of law, would even then be influenced by the commercial and business strategies pursued by his employer and would always be beholden to his employer and obliged to protect their interest,” it said. .Supreme Court issues directions to protect communications between lawyer and clients.However, while declining to extend Section 132 protection to in house counsel, the Court clarified that they may still claim limited confidentiality under Section 134 of the BSA, which bars compelling a person to disclose confidential communications with their legal adviser to the Court. This safeguard, the Court said, operates as a general rule of confidentiality but does not elevate in-house counsel to the status of “advocates” entitled to professional privilege..[Read Judgment]