In depth: Scope of privilege ruling threatens to hobble SRA investigations

I see shades of Mazur in this disruption of the status quo which has existed for decades, by a judgment at first instance. The sooner the law is clarified by the Court of Appeal and/or the Supreme Court, the better.’

So says Greg Treverton-Jones, eminent regulatory silk and co-author of The Solicitor’s Handbook, about the High Court’s ruling that the SRA cannot require production of material subject to a client’s legal professional privilege, if LPP has not been waived (news, p6).

For new broom Sarah Rapson, this is a complication the CEO could well do without as she implements her well-trailed turnaround plan. Rumours that cases have already been put on ice pending the regulator’s appeal are unconfirmed, but the consequences are certainly immediate. The SRA cannot require disclosure of privileged material unless and until the first instance judgment is overturned.

Not that every investigation is affected, of course. When clients complain about their solicitor, they waive privilege anyway. But though the regulator cannot give a number, it will be far more than a handful. Investigations about allegedly abusive litigation – the case in point – are one category that is certainly impacted. Anti-SLAPPs campaigners claim the decision leaves the regulator ‘toothless’. 

'Where does this leave the SRA in relation to its, presumably numerous, open investigations where it is in receipt of (now confirmed) privileged material?'

Claire Wallace, Hickman & Rose

Carter-Ruck, which was investigated by the SRA over its conduct after it was instructed by businessman Mohamed Amersi in a defamation claim that was subsequently dismissed, naturally has a different interpretation. It had sought a declaration that the SRA was not entitled in law under section 44B of the Solicitors Act 1974 to require production of documents and information subject to LPP. 

It described the decision as a ‘landmark…for the legal profession and its clients’. A spokesperson for the firm said: ‘At its heart is a simple but fundamental principle – namely that, in the absence of an express statutory requirement to the contrary and with very few exceptions, a client’s legal professional privilege is sacrosanct. Under the professional rules applicable to solicitors, Carter-Ruck was required to defend Mr Amersi’s privilege and we stood shoulder to shoulder with him in doing so. We welcome the judge’s careful judgment, which confirms that our interpretation of the law was correct, and which justifies the approach we adopted in this investigation.’

Amersi thanked Carter-Ruck and his legal team, including counsel and solicitors BCL, ‘for their stellar advice and support’, adding: ‘For the first time, the court has confirmed that the SRA cannot override privilege which belongs to the client. I am pleased to have made legal history in defending that principle.’

Oliver Schneider-Sikorsky, partner at BCL Solicitors, instructed by Carter-Ruck and Amersi, said: ‘LPP is a fundamental right of every client. Mr Justice Butcher’s landmark judgment provides welcome clarity on the extent of the right to LPP. The greater certainty provided by the decision benefits all clients by helping solicitors identify and safeguard privileged information while engaging constructively with regulatory requests.’

The SRA quickly confirmed it would be appealing the judgment. During the hearing, Tamara Oppenheimer KC, for the regulator, told the court the power was a ‘confined one’ with a ‘limited purpose’ of investigating a regulated person. The SRA would be ‘seriously limited’ in its ability to properly investigate misconduct if it was unable to examine material subject to LPP.

'This is a huge blow to the SRA, which has long asserted that it must be able to review legally privileged material to properly investigate misconduct by solicitors'  

Claire Cross, Corker Binning

In a comment released after the judgment was handed down, Jonathan Peddie, SRA executive director for investigations, enforcement and litigation, said the regulator is carefully considering the judgment and taking immediate steps to manage its operational implications, including providing guidance to staff on handling ongoing cases. 

He added: ‘It is vital that we have access to all relevant evidence when investigating potential wrongdoing. This enables us to fulfil our regulatory role to protect the public and uphold the integrity of the legal profession. Our ability to get to the truth of many matters may be compromised if we can no longer access information protected by legal professional privilege. Having access to this information is not only in the public interest, but it can also provide evidence in proving solicitors and law firms have not committed misconduct. Not all clients may wish to waive privilege to allow their solicitor to demonstrate that. This case raises complex and important questions about how we have, for many years and without legal challenge, used our powers under section 44B of the Solicitors Act 1974 to obtain information relevant to our investigations.’

Claire Wallace, partner at Hickman & Rose, said the judgment ‘threatens to upend the model by which the SRA currently conducts its regulatory investigations’. 

She added: ‘Many allegations of misconduct relate in some way to client work. A restriction on being able to obtain client case files due to issues of privilege will inevitably make the SRA’s job much harder. This judgment is a wide-ranging constraint on the SRA’s power to oversee the sector it regulates. The judgment… raises so many questions: Where does this leave the SRA in relation to its, presumably numerous, open investigations where it is in receipt of (now confirmed) privileged material? What are they going to do with it all? Hand it back? Seek to continue to rely upon it, possibly claiming waiver? The fallout in the next few months is going to be interesting. I suspect that all such cases may now simply be put on ice, pending the outcome of a future appeal.’

Claire Cross, partner at Corker Binning, observed: ‘This is a huge blow to the SRA, which has long asserted that it must be able to review legally privileged material to properly investigate misconduct by solicitors. This ruling will make its job far more difficult. In this case, Carter-Ruck successfully argued that without explicit wording from parliament, a regulator cannot simply claim an implied power to dismantle a cornerstone principle. Legal privilege protects a client’s right to be completely candid with their legal advisers, ensuring they get accurate legal advice without fear that their statements will later be used against them.’ 

Concerns relating to SRA investigations of SLAPPs – an arena in which the regulator has already suffered a string of defeats – appear to be most acute. Susan Coughtrie, co-founder and co-chair of the UK Anti-SLAPP Coalition, said the High Court judgment ‘will leave the SRA completely toothless when it comes to tackling SLAPPs and holding lawyers accountable for abusive litigation conduct’.

She added: ‘This case arose from a SLAPP investigation by the regulator, and the inspection of privileged communications can often be the only way in which the SRA can determine whether a solicitor has breached their professional obligations. The impact of legal threats starts long before a case reaches the court, and in the early stages the conduct, actions and strategies pursued by legal professionals on behalf of their clients are critical, and must be reviewed as part of any investigation into potential misconduct. 

‘Stripping the regulator of one of its most important tools for establishing breaches will inevitably have a negative impact on its ability to ensure that solicitors are not only upholding their duty to act in their client’s interest, but also their duty to the courts and to uphold the rule of law.’

'The judgment has blown a large hole in the regulation of the solicitors profession. The government should change the law'

Dan Neidle, tax commentator

Helen Taylor, deputy director of Spotlight on Corruption, agreed: ‘This ruling is a major blow for the SRA, and for the public interest, in holding lawyers to account, and leaves the legal regulator little more than a paper tiger. The SRA simply cannot do its job if the inner workings of a law firm are a black box. After decades of complacency about a power assumed to exist, this judgment should be a real wake-up call for parliament to urgently put these powers beyond challenge.’ 

Former Clifford Chance tax chief Dan Neidle, who secured a landmark anti-SLAPP court victory this year, said the judgment has ‘blown a large hole in the regulation of the solicitors’ profession’ and that the ‘government should change the law’.

He added: ‘The SRA will now have great difficulty investigating SLAPP, and other cases where a client’s solicitor harms other parties. If your solicitor rips you off, and you complain to the SRA, the SRA can see the papers (because you’ll waive privilege)…but if someone else’s solicitor harms you, and you complain to the SRA, the SRA will now have great difficulty investigating. And many of its pending investigations and prosecutions are, I expect, now in limbo.

‘The government shouldn’t run the risk of having the solicitors’ regulator unable to regulate the profession properly.’

Would the government even consider such legislation? We are a long way from that point. As was the case with Mazur, one must hope the courts can supply binding clarification quickly.