Legal Privilege and Seizure Risks in Germany

Legal privilege in Germany: the short answer

Legal privilege in Germany is narrower than many international companies expect. German law does not have a general attorney-client privilege attaching to documents wherever they are. Instead, protection rests mainly on the lawyer's right to refuse to give evidence (§ 53 of the Code of Criminal Procedure, Strafprozessordnung, StPO), the prohibition of seizure of certain documents in the custody of the person entitled to refuse (§ 97 StPO) and the ban on investigative measures directed at lawyers (§ 160a StPO).

Correspondence and work product held by the company itself is generally not protected unless it relates to the defence of an accused. In 2018 the Federal Constitutional Court did not object to prosecutors seizing records of an internal investigation from a law firm's office, because the client company was not itself the accused in the relevant proceedings.

For companies conducting internal investigations, the practical consequence is that interview notes, reports and e-mails may reach prosecutors unless they are carefully structured. This article explains the statutory framework, the 2018 decisions, the position of in-house counsel, the differences from common-law privilege and how to protect investigation work product as far as German law allows.

The statutory framework

The key elements are custody and relationship. Under § 97(2) StPO, protection against seizure applies only if the items are in the custody of the person entitled to refuse testimony, typically the lawyer. Documents in the company's own premises or systems, including copies of legal advice, are therefore at risk, unless they are part of the defence of an accused and protected through § 148 StPO.

The Federal Constitutional Court's 2018 decisions

In the context of the diesel emissions investigations, prosecutors in Munich searched the Munich office of a law firm that had been instructed by Volkswagen AG to conduct an internal investigation and to represent it before US authorities, and secured documents including interview records concerning the subsidiary Audi AG. Volkswagen, the law firm and its lawyers lodged constitutional complaints. In an order of 27 June 2018 (2 BvR 1405/17, 2 BvR 1780/17 and others), published with a press release on 6 July 2018, a chamber of the Federal Constitutional Court did not admit the complaints for decision.

According to the Court's press release, securing the documents did not violate Volkswagen's right to informational self-determination or its right to a fair trial. The law firm was not a holder of fundamental rights and had no standing, and the individual lawyers had no apparent standing.

The Court accepted the ordinary courts' view that § 97 StPO protects only the relationship of trust between an accused (or a company in a position comparable to an accused) and its counsel, and that Volkswagen was not in such a position in the proceedings concerning Audi.

In-house counsel

In-house lawyers admitted as syndic lawyers (Syndikusrechtsanwälte) are lawyers under the Federal Lawyers' Act, but for criminal procedure purposes their right to refuse testimony and the related seizure protection are limited. As interpreted by the courts, the rules in §§ 53 and 97 StPO protect communications with in-house counsel held in the employer's premises to a lesser extent than communications with external counsel, so legal privilege for in-house advice is uncertain. In EU competition investigations by the European Commission, the Court of Justice held in Akzo Nobel (C-550/07 P) that communications with in-house lawyers are not covered by legal professional privilege. Companies should therefore involve external counsel for sensitive legal assessments and for investigation work that may later be scrutinised.

Protecting internal investigation work product

Absolute protection is rarely achievable, but companies can improve their position:

• Clear mandate. Instruct external counsel in writing for the purpose of advising and defending the company in anticipated or ongoing proceedings, not merely to "establish the facts".
• Custody. Keep sensitive work product, such as interview memoranda and draft reports, with external counsel rather than on company systems.
• Labelling. Mark documents as prepared for the defence, without relying on labels alone.
• Selective sharing. Limit internal distribution to those who need the information; avoid sharing with auditors or third parties without considering waiver risks.
• Drafting discipline. Draft interview notes and reports factually, assuming they may be read by prosecutors, regulators or opposing parties.
• Cross-border coordination. Where US or UK privilege is relevant, structure the investigation so that it can be protected there, while recognising that German authorities apply German rules.

Legal privilege compared with common-law systems

International groups often apply concepts of legal privilege developed in the United States or the United Kingdom, such as legal advice privilege, litigation privilege and the work product doctrine. These concepts protect documents largely regardless of where they are kept, provided the communication was made for the purpose of legal advice or in contemplation of litigation. German legal privilege works differently: it is tied to the professional secrecy of lawyers and to the procedural position of the accused, and the location of the documents matters.

The consequences are practical. A legal memorandum that would be privileged in London may be seizable in Frankfurt if a copy sits on the company's server. A US investigation report prepared under the work product doctrine may be obtained by German prosecutors from the company's German subsidiary. Global investigation protocols should therefore include a German-specific section on legal privilege, covering custody, distribution and the role of German counsel.

Professional secrecy of other advisers

Auditors and tax advisers also have rights to refuse testimony and corresponding seizure protection under §§ 53 and 97 StPO, but forensic accountants instructed directly by the company usually do not. Where forensic specialists support an investigation, they should be engaged by and report to external counsel, so that their work can fall within the lawyer's professional activity as far as possible.

Privilege in civil and administrative proceedings

German civil procedure has no general disclosure obligation, so privilege disputes arise less often in civil litigation. However, document production orders under § 142 of the Code of Civil Procedure, disclosure claims in cartel damages cases under § 33g of the Act against Restraints of Competition and access requests under Article 15 GDPR can reach investigation records. In administrative proceedings, for example before BaFin or the Bundeskartellamt, the authorities' information and search powers apply, with protection mainly for documents connected with the defence. The scope of legal privilege must therefore be assessed for each type of proceeding separately.

Dawn raids and searches

During a search, the company should identify documents it considers protected, object to their seizure and request that they be sealed. Prosecutors and investigators may provisionally secure documents for review (§ 110 StPO), and the company can apply for a court decision on the lawfulness of the seizure. Practical preparation includes lists of external counsel, segregated storage of defence materials and instructions for reception staff and IT. Disputes about privilege often turn on whether documents were demonstrably created for the defence, so engagement letters and file notes recording the purpose of documents should be easy to locate during a search.

Individuals, employees and conflicts

Internal investigations involve several parties whose interests may diverge: the company, its managers and employees, and sometimes the supervisory board. Counsel instructed by the company represents the company, not the individuals interviewed, and the company controls whether information is shared with authorities. Employees and managers who face personal criminal exposure should have their own counsel, whose communications with them enjoy the protection available to the defence of an accused. Legal privilege considerations therefore also affect how the company structures joint defence arrangements, indemnities and information sharing with individual counsel.

Where the company and individuals cooperate, written arrangements should specify which information may be exchanged, for what purpose and under which confidentiality rules. Such arrangements cannot create protection that German law does not provide, but they reduce the risk of inadvertent disclosure and clarify expectations if interests later diverge.

Cooperation with authorities and waiver

Companies often decide to cooperate with prosecutors or authorities by sharing investigation results, for example to obtain a reduced corporate fine or discontinuation of proceedings. Voluntary disclosure of investigation reports generally means that any protection is lost, at least vis-à-vis the authority and often towards third parties such as claimants seeking access to files. Companies should decide what to share, in which form (oral presentation, summary or full report) and on what terms, considering parallel civil litigation and foreign proceedings.

Illustration: a hypothetical German manufacturer discovers possible bribery by a foreign sales manager. It instructs external counsel to advise on its defence against potential corporate fine proceedings. Interview memoranda are prepared and kept by counsel, while the company retains only a short factual summary. When prosecutors later search the company's premises, the summary is seized, but counsel's memoranda remain protected because they are in counsel's custody and serve the company's defence. The company later decides to present the findings orally to prosecutors to obtain credit for cooperation.

How TRW & Co helps with legal privilege

We advise companies on structuring internal investigations to protect work product as far as German law allows, on handling searches and seizures, and on decisions to cooperate with authorities. We coordinate privilege strategy across jurisdictions, represent companies in court challenges to seizures and defend them in corporate fine proceedings. Our work connects with our internal investigations and white-collar defence practices. See also the 2018 seizure decisions, employee interviews and dawn raid preparedness. To discuss a matter, contact us.