Legal professional privilege only for lawyers, Supreme Court rules
The Supreme Court ruled today that legal professional privilege (LPP) applies only to qualified lawyers – solicitors and barristers.
The eagerly awaited decision, by a majority of 5:2, maintains the existing certainty about the scope of LPP. It confirms that ‘there is no doubt that the justification for [LPP] is as valid in the modern world as it was when it was first developed by the courts’.
The Law Society had intervened in the Supreme Court case of Prudential PLC and Prudential (Gibraltar) Ltd v Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes).
The Society's chief executive, Desmond Hudson said today: ‘A lawyer’s duties and responsibilities to the client and to the courts are not available on a pick ‘n’ mix basis. The relationship between a solicitor or barrister and his or her client is a precious human right, tested and refined by centuries of common law.
‘Legal professional privilege supports the process of law, speeding the conviction of the guilty and securing the acquittal of the innocent.’
The case originated when Prudential Plc sought to withhold documents about a marketed tax avoidance scheme on the grounds of privilege. The Supreme Court, in agreement with the Court of Appeal, emphasised that extending LPP communications to other professionals, such as accountants, was a matter for parliament, not for the courts.
In the leading judgment Lord Neuberger said privilege should not be extended to communications in connection with advice given by professional people other than lawyers, ‘even where that advice is legal advice which that professional person is qualified to give’.
James Bullock, head of litigation and compliance at international firm Pinsent Masons, said legal privilege should not be used as a marketing tool.
‘The restriction of legal professional privilege to advice given by a practising solicitor or barrister ensures that the advice in question is given by a person who is both professionally qualified and rigorously regulated. That is not to say that other professionals giving advice on the law are not, but in any extension of LPP that underlying principle needs to be maintained.’
He called for parliament to address the question of extension, following extensive consultation led by the Ministry of Justice rather than an interested party such as HM Revenue & Customs.
‘Even a die-hard lawyer like me accepts that the whole question of LPP should be looked afresh in the light of modern professional practice. However, the purpose underlying the rule must not be lost sight of. It is there to protect the client, not as a "privilege" for professionals in the ordinary sense of the word.’
Michael Izza, chief executive of the Institute of Chartered Accounts in England and Wales, described the current position on LPP as ‘unprincipled and anti-competitive for individuals and businesses who we believe should be able to seek the best professional advice upon the same terms whether from lawyers, accountants or indeed other appropriately qualified professionals’.
He said that parliament must, ‘as a matter of urgency’, find a way to resolve how issues such as LPP are addressed in multi-disciplinary practices.
The Law Society will host an audio webinar at 4pm on 30 January. Tom Adam QC will be a guest.
Comments
This decision seems to fly in
This decision seems to fly in the face of the current vogue for non qualified legal advice.
Interesting that two thought otherwise-so far from being an overwhelming endorsement.
LPP
The basis of a free civil society is an independent judiciary,the jury trial and legal privilege.
Without all three you have a tyranny.
I remember this old wisdom from a long dead Judge ... the only real duty of a lawyer is to keep his mouth shut.
Non qualified legal advice is an oxymoron.
And anyone who would seek it..... just drop the oxy.
It sticks a bit in the craw
I suspect the Supreme Court winced at the thought of everyone with a dodgy tax scheme up their sleeve, being able to claim privilege. However, does it extend to gambling operators and used car salesmen running ABSs?
SOLICITORS "RIGOROUSLY REGULATED"?
I presume James Bullock (Pinsent Masons) was cracking a joke when he said barristers and solicitors are rigorously regulated. He couldn't have said it straight faced, could he?
Oh I know the regulators impose lots of stupid and time wasting regulations and deal with solicitors who don't fulfill them. But they don't worry about dishonesty or anything like that.
An internationally renowned firm obtains over £25k by deception from a Patient of the Court of Protection. The firms complaints partner has not contradicted the facts. Are we worried? Of course not, says the SLA. I asked whether nowadays solicitors are allowed to have one bite at the cherry before being disciplined, which got no reply. The same is true of a national firm and a regional firm which I have looked into and I have found to have been less than honest. I now know several dishonest barristers too
I'm sorry, Peter & Bonzo, but your patronising attitudes are examples of why the general public dislike lawyers, and another correspondent considers the profession to be full of "big heads". I didn't agree with all of his criticism. But I understand his feelings. I wish I could say, as I once might have been able to say, that of course consultations with the legal profession should be privileged. I don't take that view any longer. It should apply to criminal matters and nothing else, because the honesty and integrity of the legal profession can no longer be assumed- ABSs or no ABSs
Strange to relate, but
Strange to relate, but rigorously does not mean effectively.
The financial services "industry" was rigorously regulated but most certainly not effectively.
Oh, and you can, apparently, get a knighthood for having regulated rigorously-but not effectively.
Presumably some form of rigor mortis.
LAP
Why does James Bullock of Pinsent Masons say the judgment should not be used as a marketing tool?
Is he worried about something?
What about Licensed Conveyancers?
Licensed Conveyancers advertise themselves as "Lawyers" (a fact that sticks in my craw), but according to this judgment their clients do not have the benefit of legal professional privilage?
Because they are lawyers. In
Because they are lawyers. In other words they advise on law-same as solicitors, barristers or indeed anyone else who cares to advise on the law.
Prudential decision
I am not a Guardian reader, and of course I represented the ICAEW in the Prudential case. That aside, the trouble with this decision is the anomalies it creates. On the one hand the lawyer's tax advice is protected by LAP; on the other, the exact same advice given by a chartered accountant (whose profession provides 90% of tax advice in the UK) is not. Why is the client denied the assurance of confidentiality he receives when he consults his lawyer, but not when he consults his accountant? Lord Sumption whose reading habits are not known to me (though he writes frequently for the Spectator) was spot on to say that this is unprincipled. But it gets worse - where the accountant gives legal advice in relation to litigation, then his advice IS privileged.Why is the accountant entrusted with litigation privilege but not LAP? The idea, as advanced by the Law Society on the appeal, that solicitors are somehow special and that only they (and other lawyers) deserve the ability to give privileged advice is demeaning - and ignores the fact that privilege belongs to the client. Its the client who loses here. Let's hope Lord Clarke's plea for Parliament to sort this out gets the response it deserves.
Colin Passmore
Solicitors and barristers are different
Colin Passmore is wrong. Solicitors and barristers deal with the liberty of the subject (and in the context of trials abroad - human life). They are in no way to be compared with a bunch of grasping bean counters, engineering tax fiddles. Every day, up and down the country, solicitors deal with the fundamentals of a free society, the right to housing, the right to see one's children. To expect greasy spivs intent on labelling income as "loans" for the benefit of someone who can't see why he should pay tax, to have the same privileges as lawyers, is ludicrous.
No, he isn't. To put it the
No, he isn't.
To put it the terms of "civil rights", the right of the citizen to seek to protect his own property from the state is every bit of fundamental concern as the right to protect his liberty. Indeed, it IS part of the right to liberty.
It has always surprised me that the citizen seeking to keep what is his, is derided as "tax fiddles". Whilst tax is a necessity in a modern state, the state taking a citizens property is still a moral wrong.
Prudential decision
In the case, Lord Clarke posed the question:
“Suppose that two individuals, A and B, have the same problem, the solution to which depends upon an application of the legal principles of taxation law to the same, or substantially the same, facts. Suppose that A seeks advice from, say, Freshfields, and that B seeks advice from, say, PricewaterhouseCoopers...Are both A and B entitled to ...refuse to disclose to HMRC the information and the advice?”
It is difficult to disagree with him that, “the only principled answer to that question is yes” given “that the privilege is that of the client, that is A and B, and not that of either the solicitors or the accountants”.
Anon is talking rubbish
Oh dear - anon above has got it completely wrong. This was not a case of the Revenue trying to expropriate property illegally - it was to do with a marketed tax avoidance scheme. At best, they are morally dubious, but legal. At worst, most of them appear to be tax evasion disguised to look legal. Just think of how a lot of them rely on "loans" that don't have to be repaid.
In neither case should they be protected by special privileges.
If the scheme is legal, then,
If the scheme is legal, then, by definition, it is not tax evasion.
Further, as previously stated, it is not immoral for a citizen to seek to keep his own property to look after himself and his family-or indeed do anything he wants with it.
However, it most certainly IS immoral for the state to take a citizens property by threat of force against him i.e. taxes. Most people put up with this because they believe there is a general benefit-but that does not make the taking of property by threat of force a moral action or even a moral good.
Naturally, the balance of benefit is being increasingly questioned as the state uses the citizens money for things many disapprove of- e.g. propping up fraudulent banks, or launching wars of aggression.
I do not understand why
I do not understand why commentators have to hide their identities in debates on important legal issues - let's have an open debate, interested observer, not these offensive comments. This is an important debate which you have demeaned. Show yourself and engage on a more intellectual level. And perhaps you might explain why solicitors who advise on tax avoidance schemes can do so with the benefit of privilege.
Missing the point yet again
A solicitor advising on a tax scheme is an officer of the court, subject to professional ethics and discipline. Acme Tax Avoidance Ltd based in the Cayman Islands isn't.
Interested Observer
Again Lord Carke’s opinion is worth noting. He refers to Lord Sumption expressing the view that “the privilege extends to advice given by members of a profession which has as an ordinary part of its function the giving of skilled legal advice” and says “I would expect that criterion to be satisfied only where, and to the extent, that they are members of a properly regulated professional body”.
This is the difference between practices such PricewaterhouseCoopers and the type of companies referred to by Interested Observer.
Interesting point. However
Interesting point.
However whilst advising on a tax scheme the solicitor is not "acting" as an officer of the court. Even were solicitors not "officers of the court" they are still bound by professional ethics and discipline.
In fact surely there is no need for solicitors actually to be officers of the court-it is anachronistic in the modern legal world and should be abolished. It provides no privileges and entails only liabilities which are otiose with the regulation of the profession now lying with the SRA.
Officer ofthe Court subjectto professional ethics and discipline
"A solicitor advising on a tax scheme is an officer of the court, subject to professional ethics and discipline."
Well, while the first statement is true. As regards it having any meaning, the courts take no notice of dishonesty perpetrated by solicitors before them, nor even act to put the matters right, even when the courts themselves have been responsible for it through lazy and lax procedures.
They simply put the large financial burden on the applicant/defendant or interested 3rd party to deal with what they have allowed to happen. So it is often too expensive and too risky to apply to put it right (even when the true facts are clear)
Next assertion: "subject to professional ethics" -well, yes, these sort of exist. But not the old mindset that honesty and integrity is paramount and the clients interest comes first. Why has the Law Society had to suggest that a solicitor's training includes an ethics section if everything is fine and dandy?
Next assertion: solicitors are subject to discipline. You're having a laugh aren't you? They are subject to discipline and threats for not having the appropriate officers in place all right. But when it comes to matters of substance, thats a different matter. For example, the SRA did not think it even worth investigating an internationally known firm that obtained payment of over £20,000 more than it was due by saying it had received payment of costs which its client denied. All of the evidence was in writing. The complaints partner of the firm did not dispute the facts not deny what the firm said (it was in writing). So why does the SLA exist?
More important it is worthless and not true in fact for the public to rely on the (true) statement that "A solicitor advising on a tax scheme is an officer of the court, subject to professional ethics and discipline".
It is all a sham. And the public needs to know that.. This reminds me of those worthless guarantees/debt payment policies many of us bought from shifty salesmen. Whats the difference?
Qualified Lawyers?
Can somebody clarify whom the Judgment has deemed 'qualified lawyers'. The Law Society account says just Solicitors and Barristers. As a CILEx Fellow I would like this clearing up.
CILEX members
According to Lord Neuberger at para 29, it also extends to members of CILEX.
In which case..
..can the Law Society correct their report of this matter? If Lord Neuberger deems CILEX Fellows to be qualified Lawyers it is perhaps time for the Law Society to concede the point.
Cilex
What is a qualified lawyer? Someone I suppose who is member of the Bar or admitted to the Roll of solicitors. Cilex are neither, nor do they have to pay for a practising certificate.
It seems that any Tom, Dick or Harry working in a law firm can call themselves lawyers these days.
Open debate
Colin Passmore (who is, of course, an expert on the law of privilege) asks "why is the client denied the assurance of confidentiality he receives when he consults his lawyer, but not when he consults his accountant?".
That question confuses two concepts: confidentiality and privilege. Confidentiality is a pre-condition to something being privileged, but the fact that something is confidential is not sufficient to mean that it is also privileged. The question should be "why does the confidential lawyer/client relationship attract privilege when the confidential tax adviser/client relationship does not?". One might equally ask "why don't the planning consultant/client or the chartered surveyor/client relationships attract privilege, if the advice being given relates to the law?"
The practical answer is that a line has to be drawn somewhere. Drawing the line is inevitably going to lead to some potential anomalies and, for that reason (and with the advents of ABSs), the Supreme Court if quite correct to leave it to Parliament to decide whether the boundaries need to be expanded.
A blog which appeared on the ICAEW website asked "isn’t [Prudential] an unwinnable case with 300 years of case law to overturn? Why waste members cash when the result is a forgone [sic] conclusion?" Colin is lucky to have a client which was prepared to go to the Supreme Court in a case where its chances of winning were unlikely ever to be more than about 50%.
Cilex..
...do have to pay for a practising certificate - i'm looking at mine right now Harry. I'll take the President of the Supreme Courts opinion over yours, to be fair.
Well said.
Well said.
Floodgates
Post by "Me" is clearly spot on. Given the frequency that LPP is used against the state, the chances of Government allowing parliamentary time to legislate for its extension are slim!
Time for a PROPER rethink
What is needed is a proper overhaul of the legal professions.
It is time to grow up. Ilex started as a way of ensuring staff in legal offices were properly trained and recognised. Then it became a route to qualification to recognise the experience and work done. (a move I applaude by the way).
Then sudenly they want equal pegging!
Well according to the last several Gvmts we "are all lawyers now" so perhaps it is time for a change.
Merge the professions and have proper routes of entry academic and work based. Or simply scrap the total academic route. If ever a profession needed practical skills and experience it is the legal one!
Time for a change.
qualifications
2013 yet Harry Potter is stuck in the 1950s. There are many dually qualified solicitors and legal executives. I hold a first class honours degree and have been a Fellow for 15 years having worked in the law for 36 years. I earned my reputation by being an excellent lawyer and the decent solicitors I've worked for have recognised that. We hold practising certificates and are subject to the same ethics. My experience dictates, having supervised solicitors and Legal Executives (now Chartered Legal Executives), that assessment of lawyers capabilities depends upon their skills and abilities not some outmoded and defunct notion of what being a lawyer entails.
Well said Me and Anon.