Jones Day Washington, D.C., offices. Diego M. Radzinschi

For lawyers accustomed to working under U.S. attorney-client privilege, the raid by German prosecutors on Jones Day’s Munich offices and the legal battle over whether they can use the seized materials is hard to comprehend.

Hired by Volkswagen AG to oversee an internal investigation into the German carmaker’s use of secretive software to cheat emissions tests, Jones Day in March found its local outpost overrun by law enforcement agents, who left with more than 150 lever arch folders and USB sticks full of electronic files relating to the so-called “dieselgate” scandal.

VW called the move a “clear violation of legal principles.” But the status of privilege in Germany is actually anything but clear. In fact, it’s a bit of a mess.

Until relatively recently, privilege was virtually nonexistent: Unless you were acting as criminal defense counsel, you had no legal privilege. At all. Things changed in 2011, when protection over client correspondence was broadened to cover any independent lawyer, irrespective of the nature of the assignment.

Straightforward enough, you’d think. The only problem is that German courts can’t seem to agree on what constitutes a formal engagement between lawyer and client. That perhaps explains why VW failed with two legal attempts to block prosecutors from analyzing the Jones Day documents, but Germany’s highest court in July granted a rare injunction while it looks into the matter more closely.

The situation is further clouded: There is no criminal liability for German companies, which receive administrative fines in the event of misconduct, and prosecutors often open criminal investigations without naming a defendant, instead targeting “unknown individuals,” as was the case with VW.

The Munich prosecutors’ office told me that it had court approval for the raid. Curiously, it argues that Jones Day has been operating merely as a “third party,” rather than legal counsel. Lawyers I spoke to were deeply unconvinced. “It was crystal clear that the firm had a mandate from VW that should have protected them from search and seizure,” says one German law firm partner. “It was a very aggressive move by the prosecutors.”

Unfortunately for VW and Jones Day, legal recourse for the subjects of dawn raids in Germany is extremely limited. Complaints have to be filed at the very bottom rung of Germany’s judicial ladder, the amtsgericht, which are equivalent to magistrates’ courts and typically handle low-value disputes relating to matters such as alimony and rental agreements. The sole permitted appeal is only heard by a district court, whose decision becomes final and binding.

Having lost at both stages, VW’s only remaining option was to go nuclear and file a constitutional complaint with Germany’s top court, the Bundesverfassungsgericht (BVG).

But there’s another problem. It is currently unclear whether a legal entity from outside the European Union has the right to initiate a constitutional complaint in Germany. It was entirely possible that a filing by the U.S.-based Jones Day would be dismissed. Jones Day and VW therefore filed three separate but identical complaints: one by the company, another by the law firm and a final one on behalf of three individual Jones Day lawyers working on the case—who, crucially, are German citizens.

There’s a lot riding on the dispute, and not just for the parties involved. The BVG’s decision should finally bring some much needed—and long overdue—clarity to the status of legal privilege in Germany. The outcome will also have potentially huge ramifications for the way German companies carry out internal investigations—particularly if the court rules against VW and Jones Day.