The Law Society today rebutted a claim by elite accountancy body the ICAEW that legal professional privilege ‘seriously distorts the market’ for tax and other advice.
Accountants do not have the same duties to their clients or the courts, Society president Jonathan Smithers stressed.
The claim is included in the response of representative body the Institute of Chartered Accountants in England and Wales to the recently announced study by the Competition and Markets Authority into the supply of legal services.
The ICAEW (pictured) is currently an approved regulator and licensing authority for probate. It is seeking the same dispensation for the remaining reserved activities, including rights of audience and conduct of litigation.
It argues: ‘Accountants currently represent clients before the tax tribunals of the General Regulatory Chamber (GRC) and provide expert litigation support to solicitors relating to both civil and criminal actions. They also appear in court as expert witnesses.
‘Obtaining accreditation to carry out the further reserved legal activities for the service area of taxation is likely to be attractive to all sizes of accountancy firms.’
The body claims this would provide a ‘natural link to the traditional accountancy practice’, but it is also concerned about the effect of privilege on a free market.
In 2012 the institute intervened unsuccessfully in the landmark Prudential case, in which the Supreme Court ruled that LPP applies only to qualified lawyers.
The institute greeted that decision by urging parliament to take action, describing the current position as ‘unprincipled and anti-competitive’ – a claim it reiterates in its response to the CMA.
‘Some law firms have marketed their services on the basis that they are in a position to keep their advice completely confidential, where accountants are not able to do so,’ the response adds.
‘The anomaly remains [and] results in a serious distortion to the competitive environment, where clients may seek professional services on the basis of the availability of [privilege], rather than a cost-effective service.’
However, Law Society president Jonathan Smithers said today: ‘While the Law Society recognises that accountants provide valuable tax advisory services, it is concerned that extending reserved tax-based legal services could put consumers at risk and would not be in the public interest.
‘Litigation is a specialist area in itself, and has fundamental differences from advisory work.
‘Accountants do not have the same duties to their clients, or to the courts, as solicitors. It does not therefore follow that because a body’s members provide advisory services in an area that it also ought to be able to conduct litigation in relation to those matters. Finally, this would result in further regulatory complexity, creating multiple levels of regulation, while several government consultations are going on to potentially reduce regulation.’