<h3>Background</h3>
In the event of suspected violations of the law or other irregularities, companies conduct internal investigations to determine and analyze the relevant facts. These internal investigations are often led by outside counsel. In parallel, criminal and regulatory authorities may conduct their own investigations into the same matters. To further their investigations, they may request documents and information prepared and collected in the course of the internal investigation, including investigation reports and supporting documents. In particular, financial institutions supervised by the Swiss Financial Market Supervisory Authority FINMA are subject to extensive disclosure and cooperation obligations. Consequently, findings of internal investigations are often voluntarily disclosed to FINMA. In turn, the prosecutors may try to obtain the findings of the internal investigation directly from the supervised financial institutions or, through administrative assistance, from FINMA.
In this context, the questions arise as to whether the findings of an internal investigation conducted by outside counsel and the collected supporting documents are protected by attorney-client privilege and whether privileged documents and information submitted to FINMA may be obtained by the prosecutors. In two recent cases, the Swiss Federal Supreme Court ruled on those issues (see <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_874-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_874/2023</a> and <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_158-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_158/2023</a>).
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_874-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_874/2023</a>, the prosecutor requested FINMA to provide through mutual legal assistance the enforcement order of the proceedings against a Swiss bank as well as the report of the investigation agent appointed by FINMA. The Federal Supreme Court concluded that the prosecutor could obtain these documents from FINMA, even though the bank argued that the enforcement order and the report of the investigation agent were based on a privileged investigation report of the bank&#8217;s Swiss outside counsel.
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_158-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_158/2023</a>, the criminal justice authorities requested the bank in the same matter to provide the report of the internal investigation conducted by the bank&#8217;s Swiss outside counsel. The Federal Supreme Court concluded that the prosecutor could not obtain the report from the bank due to attorney-client privilege, although the bank had voluntarily submitted a copy of the report to FINMA.
The present Bulletin summarizes the key considerations of the Federal Supreme Court and their practical implications.
<h3>Key Considerations of the Federal Supreme Court on Attorney-Client Privilege</h3>
Authorities may forward information voluntarily disclosed to them, even if the information initially was subject to attorney-client privilege
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_874-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_874/2023</a>, the bank took the position that the enforcement order and the report of the investigation agent appointed by FINMA were protected by attorney-client privilege because these documents were based on the privileged internal investigation report of the bank&#8217;s Swiss outside counsel.
The Federal Supreme Court rejected the bank&#8217;s arguments. According to the court, attorney-client communications are generally protected by attorney-client privilege. However, disclosures to third parties (e.g., an insurance company or government agency) are not considered attorney-client communications, even if the disclosure contains privileged information. Once privileged information is knowingly and voluntarily disclosed to third parties, the information leaves the attorney-client relationship. Therefore, the attorney-client privilege does not prevent third parties from fulfilling their obligation to testify or produce documents. According to the court, this also applies to voluntary disclosures to FINMA, even if the supervised financial institution expressly reserves its rights to claim attorney-client privilege protection.
The Federal Supreme Court concluded that privileged information in the possession of FINMA could be obtained by the prosecutor through mutual legal assistance. According to the court, this applies all the more to the FINMA enforcement order and the report of the investigation agent appointed by FINMA.
The question of whether the prosecutor could obtain the privileged report of the bank&#8217;s Swiss outside counsel from FINMA was not part of the proceedings and was therefore not explicitly decided by the Federal Supreme Court. However, the court&#8217;s considerations make it sufficiently clear that this would likely be the case if the report was submitted to FINMA voluntarily. Thereby, the court confirmed that supervised financial institutions are not legally required to disclose to FINMA information protected by attorney-client privilege.
Investigation of the facts conducted by external counsel is protected by attorney-client privilege
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_158-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_158/2023</a>, the Federal Supreme Court confirmed that reports of internal investigations led by Swiss outside counsel are protected by attorney-client privilege, in particular when the internal investigation is conducted in connection with the advice and representation in existing and impending legal proceedings. In this context, the court concluded that the investigation and analysis of the relevant facts are part of the core area of outside counsels&#8217; work and are therefore privileged.
As a result, the Federal Supreme Court ruled that the report of the bank&#8217;s Swiss outside counsel was protected by attorney-client privilege. The exception established by the Federal Supreme Court in earlier decisions that reports by law firms are not subject to attorney-client privilege if they were prepared in connection with documentary obligations pursuant to the Anti-Money Laundering Act, did not apply in the present case.
Selection and analysis of pre-existing documents is protected by attorney-client privilege
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_158-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_158/2023</a>, the Federal Supreme Court also confirmed that while internal bank documents as such are not protected by attorney-client privilege, the selection and evaluation of those documents by Swiss outside counsel constitute legal advice and are therefore protected work product. Consequently, the copies of pre-existing documents such as bank internal documents attached to an investigation report from Swiss outside counsel are privileged.
As a result, the Federal Supreme Court ruled that not only the report of the bank&#8217;s Swiss outside counsel but also all documents enclosed to the report were protected by attorney-client privilege.
Voluntary disclosure to FINMA does not lead to general loss of attorney-client privilege
In case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_158-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_158/2023</a>, the Federal Supreme Court confirmed that the voluntary disclosure of privileged information to selected third parties does not constitute a general waiver of attorney-client privilege. Consequently, privileged documents and information voluntarily submitted to FINMA by a supervised financial institution do not lose their confidential character and therefore remain protected by attorney-client privilege. Hence, prosecutors may obtain privileged information from FINMA through mutual legal assistance – as this was decided in case <a href="https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://06-08-2024-7B_874-2023&amp;lang=de&amp;zoom=&amp;type=show_document" target="_blank" rel="noopener">7B_874/2023</a> – but may not seize the same privileged information directly from the supervised financial institution.
<h3>Conclusion and Practical Implications</h3>
The Federal Supreme Court has reinforced the protection of attorney-client privilege in the context of internal investigations. However, the court&#8217;s position that prosecutors may obtain privileged information from FINMA through mutual legal assistance leads to a disproportionate restriction of the application of attorney-client privilege in connection with mutual legal assistance proceedings between Swiss authorities. The decision is part of a series of Federal Supreme Court decisions that undermine the protection of attorney-client privilege in favor of an efficient and unimpeded cooperation between Swiss criminal and regulatory authorities.
This new case law applies not only to the disclosure of documents to FINMA, as in the case before the Federal Supreme Court, but also to disclosures of privileged information to any other authority (e.g., the Competition Commission or tax authorities) or third party. Financial institutions, as well as other companies, must therefore consider this case law whenever they intend to disclose documents and information voluntarily to authorities and other third parties. Anyone who knowingly and voluntarily discloses privileged documents and information to a third party now risks losing the protection of attorney-client privilege for disclosed documents and information in the possession of the third party.
To preserve the protection of the attorney-client privilege when cooperating with authorities, companies have the following options: (1) consider disclosure of privileged documents and information only if compelled; (2) when possible communicate privileged information orally rather than in writing; or (3) give regulators or other competent authorities access to privileged information on a review-only basis. None of these options is truly satisfactory, and they may be difficult to implement in practice. As a result, this new case law may have the effect of significantly limiting or at least complicating cooperation between companies and authorities as companies will now have to carefully decide on a case-by-case basis whether to disclose privileged information to regulators or other competent authorities.

Web_Preview_AI_Anwaltsgeheimnis_270824

Swiss Court Limits and Reinforces Attorney-Client Privilege

<h3>Reflections on How COVID May Change the Legal Profession</h3>
I. Taking Care of Our Key Assets
Most big law firms have kept up remarkably well during the pandemic. Some even had record years when their clients, and the economy at large, were in crisis. Even so, the manner in which the legal profession operates may well change—something that in many ways was overdue. This change concerns the two key assets every law firm has:
<ul>
<li>our clients, which include our referral sources, and</li>
<li>our talent, the gifted young lawyers who are pursuing their career with us.</li>
</ul>
II. Keeping up with Our Clients
What Clients Want
COVID has been a boon for law firms, not the least as a result of helping clients who were in firefighting mode. But this constant firefighting may also mean that some law firms have not spent sufficient time to redesign client service in a manner that is fit for the future. A few thoughts on this:
<ul>
<li>Understand what clients want. It cannot be said often enough: lawyers should speak less and listen more. This applies to video conferences (VCs) as much as it does to physical meetings. But how good are lawyers at following up on this promise? Do they call a client after a tedious meeting to debrief, hopefully by video-call, rather than rushing off to the next assignment? Do clients and counterparties—as well as team members working on the file—get a chance to air their views in a VC? After all, every participant occupies the same size of square on a computer screen, so they all deserve to be heard. Moving ahead in a post-COVID world means being inclusive, and this starts with how meetings are conducted.</li>
<li>Be crisp, be concise. During the pandemic, as much as in any other crisis, there was no time to get up to speed on what the law says. Lawyers needed to have all the relevant information at their fingertips. But this does not mean that clients have to be advised with long-winded memos or Ciceronian speeches. Oftentimes it may be better to send the client only a two-page memo summarizing what is really relevant for the business decision; to write talking points for the chair of a board meeting rather than a lengthy summary of the procedural rules for decision-making; to summarize the advantages and drawbacks of settling a drawn-out litigation case in two or three paragraphs.</li>
</ul>
Hans-Peter Frick, who for over 20 years served as the Group General Counsel of Nestlé, got it right: «We are not here to practice law. We are here to offer legally sound business solutions». This has been a yardstick for many inhouse counsel, and it should also be the new normal for law firms. Indeed, lengthy memos are out. Crisp e-mails are in.
Advantages and Limits of Digital Meetings
The world has gone digital; VCs are here to stay. This is unlikely to change even when travel is possible again. Many meetings work well, or even better, on screen than in person: speakers tend to be more disciplined, mutual interruptions are rarer, lengthy speeches do not happen. Law firm partners&#8217; meetings can be efficiently conducted by VC, routine negotiations or project management calls as well. Continuing education also works over the screen: lectures by VC can be most effective, especially if interaction is encouraged. Even court hearings, hitherto seen as the epitome of the presence of an advocate in a room and therefore absolutely indispensable to be held in person, are now conducted online. The English courts have been faster than those on the Continent to pick up on this trend.
Clearly, there are limits to videoconferencing. VCs do not allow for the proverbial «step out on the balcony» where I can take my client out of the room and discretely discuss a point with them to advance a settlement or bring closure to a difficult commercial decision. VCs do not allow me to pick up all the little things, the non-verbal signals that are inherent in any in-person meeting: the smell, the posture, the raised eyebrow.
Still, one can make the best out of VCs. To begin with, they are more inclusive precisely because no-one needs to travel to one location. This allows for broader participation even in critical situations. Moreover, there are other ways to keep up the contact with the client or opposing counsel:
<ul>
<li>Pre-COVID, issues often got sorted out after a meeting, walking back to the office or driving together in a taxi on the way to the airport.</li>
<li>Today, lawyers can find different ways to debrief: after a meeting, they can video-call. This also allows for a glimpse into clients&#8217; lives, especially those who use no artificial screen, whose backgrounds feature real bookshelves or paintings. One of the author&#8217;s favorite clients even takes calls in his garage while repairing his vintage Porsche; and what gets sorted out in the garage is often as robust as what was agreed in the taxi in earlier days.</li>
</ul>
III. Taking Care of our Colleagues in the Firm
The Way We Work
Clearly, COVID has brought a boost in the use of technology. VCs have almost entirely replaced physical meetings, e-Tools have changed the way lawyers work. By now, even the most seasoned lawyer knows that he or she must be able to master new applications without asking their PA or the IT staff.
The way we work will change. Work from home (WFH) is here to stay. Some associates like to work in the office, others are equally and sometimes more productive at home. But those who live in a two-bedroom flat, drafting stacks of contracts with family duties on the side have a different attitude to WFH than those for whom the &#8220;H&#8221; in WFH means a second home in the Hamptons, the Cotswolds or the Swiss Alps. That said, some—but not all—young staff appreciate the flexibility of working from home.
The CEO of Goldman Sachs calls WFH «an aberration». But notwithstanding this quip, most professional service firms will no longer be willing to turn back the clock. Rather, they will have to find their own mix between in-office days and work from home. And a WFH policy should not be decreed from the top, so why not introduce a streak of democracy in otherwise tightly managed firms? It is worth listening to a law firm&#8217;s junior staff before deciding what the right mix between in-office days and work from home is.
Keeping Teams Together
In a WFH environment, seeing one&#8217;s own team and looking them into the eyes is a challenge. But it needs to be done. Virtual coffee breaks can help; and they should be real breaks, not just another pep talk from the boss. Rather than smiling at each other, why not let the most junior member of our team propose a conversation topic on which every team member can chip in?
And even if WFH is here for good, it is important to keep teams together. Mandatory in-office days may help, with continuing education sessions, extended coffee breaks and cocktails in the early evening. These days may be less productive in terms of billable hours, but infinitely more valuable in terms of social glue.
Not to be forgotten: work during COVID has put even more of a strain on new entrants in law firms than on those who already know the organization by heart. A customized in-person induction program is of little help if the office is almost empty. Mentoring becomes more important than ever because meetings on the fly do not happen anymore.
Mental Health
Finally, and perhaps most importantly, mental health has come to the forefront of professional service firms. Burn-out and fatigue have always been an issue for lawyers of all ages, but few dare openly to speak about it.
The well-being of co-workers at every level matters because COVID has brought an additional burden to many of us—but fewer opportunities to re-energize. Some worry about family and friends falling ill, or succumbing to the virus themselves and still having to get the work done. Others may need to take care of people who are struggling. And given restrictions on public gatherings and travel, there is no relief in sight. Over the last two years, everyone missed out on otherwise invigorating highlights: family get-togethers, trips across the world, small concerts in cramped nightclubs.
Stories of associate burn-out abound in the legal yellow press. They are typical for the end of a long economic cycle, rather similar to 1999 and 2007/08. This time, workload is exacerbated by the additional strain that COVID put on everyone&#8217;s lives. London firms try and cope by throwing money at the problem. I&#8217;m afraid this is not going to do the trick in the end.
Right now, the biggest burden appears to be on mid-level associates who do all the documentation work, day in, day out. Do law firm leaders know how they are doing in these times? Do they have the chance to express their feelings if they are overwhelmed? And most importantly, are their concerns taken seriously, and acted upon, when they speak up—before it is too late?
For law firm leaders, it would be dangerous to resign themselves to just getting through the day or to hide in a cocoon. Many of those around them may be in a situation where they are about to reach their limit: colleagues in the firm, those in society who are affected more by COVID than any lawyer is.
IV. Looking Ahead
Building Networks is More Difficult than Keeping Them
Seasoned lawyers should also be mindful of the situation which their junior colleagues are in: if I have built a network of trusted clients and colleagues around the world over 20 years, it is easy to stay in touch on screen or by telephone. We&#8217;ve met many times over. We&#8217;ve had a glass of wine or a masala chai together. We sat in sticky conference rooms with no air-conditioning. We laughed at ourselves. We literally rubbed shoulders.
The game is entirely different for a young lawyer who is just about starting to build her career and her network. She cannot draw on the same depth of relationships and camaraderie. Law firm leaders are in a position to help; they can open the door. After all, networking is not only about building one&#8217;s own contacts, it also means passing on relationships to the next generation. Catching up one-on-one is certainly cozy, but including others in the conversation is now even more important than pre-COVID. Involving the next generation in personal interactions stays a key feature of keeping law firms successful.
Law Firm Conferences
Do law firm conferences still matter? Are they worth the trip, the pre-flight PCR test, the lingering doubt whether one has to quarantine upon return? Continuing education sessions may well be just as efficient online, so they are no longer worth the bother. But people will always want to join networking events with a tangible value. In-person contact still matters. Overseas trips may become fewer and farther between, though, so everyone will have to choose what remains relevant. Boondoggles are out. Networking events that are truly worth the time and travel will come back, eventually.
Working Towards a Brighter Future
During the times of COVID, lawyers and law firms were lucky. We weathered the storm, our books of business remained strong. The world will change many times over, but some principles stay: keeping our client relationships, caring about our associates&#8217; well-being, cultivating our networks and passing them on to the next generation, all of which will make our firms stronger. The future is bright if we approach it with an open mind.

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20230320_Credit Suisse-merge_001

On March 19, 2023, Credit Suisse announced that Credit Suisse and UBS have entered into a merger agreement following the intervention of the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority FINMA. UBS will be the surviving entity upon closing of the merger transaction. Homburger advised Credit Suisse on boardroom matters, contingency planning, transactional options, bank regulatory and corporate law aspects in connection with the various measures to support its liquidity situation and the merger of Credit Suisse with UBS.
The Homburger team was led by Daniel Daeniker (Corporate / M&amp;A), Benjamin Leisinger (Capital Markets and Financial Market Regulation) and Claude Lambert (Corporate / M&amp;A), and included Dieter Gericke, Andreas Müller (both Corporate / M&amp;A), Flavio Romerio (Crisis Management), Hansjürg Appenzeller (Corporate / M&amp;A), Richard Stäuber (Competition), as well as associates Alexander Wherlock, Vanessa Isler, Daniel Hulmann, Manuel Baschung and Sofiya Shavlak (all Financial Market Regulation) and Magda Aref (Corporate / M&amp;A).

Homburger advised Credit Suisse on various aspects in connection with the merger of Credit Suisse with UBS

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Swiss Court Limits and Reinforces Attorney-Client Privilege

Back to the Office or Brave New World?

Homburger advised Credit Suisse on various aspects in connection with the merger of Credit Suisse with UBS

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