Privilege protection bid fails

The government last week rejected an attempt to give statutory protection to solicitors from money laundering prosecutions when they wrongly believe that information which should be disclosed to the authorities is covered by legal professional privilege.

The clash came in the third day of House of Lords' committee stage on the Proceeds of Crime Bill.

Shadow lord chancellor Lord Kingsland said case law insisted that a solicitor needs to have a strong prima facie case that the client is engaged in a criminal purpose to override privilege.

He told peers: 'If a solicitor exercises [his professional judgement] and concludes that there is insufficient evidence to show a prima facie case, but it is later established that the client was a fraudster, it seems wrong that the solicitor can be guilty of a criminal offence.'

Liberal Democrat lawyer Lord Thomas of Gresford warned that solicitors may not realise that, under the Bill, they would be required to report to the authorities when a client tells them that a third party is engaged in money laundering.

However, Lord Rooker - since reshuffled away from the Home Office - rejected amendments, saying: 'Professional legal advisers can be expected to know the scope of professional legal privilege, and, if they have a problem, can seek advice from their own professional bodies.'

He added that courts would not convict unless a solicitor knew the information was not privileged.

'We believe it is best to rely on that rule of interpretation, which is the current situation, rather than try to put anything on the face of the Bill.'

The amendments were withdrawn, but Lord Kingsland said he would consider whether to revisit the issue at the report stage.

Lord Rooker also rejected an attempt to grant accountants legal professional privilege over money laundering reporting.

It was argued that privilege gave lawyers a competitive advantage when offering tax advice.

'Questions of competition and commercial advantage must in this instance be considered separately from the interests of those clients, for whose protection the common law concept of legal privilege has evolved,' he said.