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Legal advice privilege – the advisor’s status or her function?

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Supreme Court Main Entrance 03521C press office supplied  146x219The Supreme Court has ruled that legal professional privilege should not be extended beyond lawyers. Mark Surguy, Isabelle Makeham and Gareth Hill examine the ruling. 

The Supreme Court in R (on the application of Prudential plc and another) (Appellants) v Special Commissioner of Income Tax and another (Respondents) [2013] UKSC 1 On appeal from [2010] EWCA Civ 1094 has considered whether the protection of legal professional privilege ("LPP") should be extended beyond exchanges that individuals/companies have with their lawyers to cover advice given by accountants, or other professionals, and, if so, what sort of advice. The  case did not address any questions relating to litigation privilege.

This is of importance to all organisations, whether private, public or third sector, as exchanges with such non-legal professionals can be highly sensitive. If LPP does not attach to these communications, then you are exposed to the possibility of being obliged to disclose them in any litigation, no matter how damaging.

The dismissal of the appeal means that the law has not changed. This case provides useful guidance on the application of LPP and reaffirms the importance of ensuring that LPP attaches to confidential documentation.

Background

LPP is a common law rule of evidence founded on public policy which prohibits any disclosure in Court (whether through the production of documents or the answering of questions) of confidential legal advice passing between a solicitor or barrister and his client (in the case of legal advice privilege) and between lawyer and a client or third party (in the case of litigation privilege). 

The rule is treated differently in other countries and it has been recently decided that in-house counsel are not entitled to claim the privilege in the context of a European Commission anti-trust investigation.

Over time the privilege has been extended to cover salaried legal advisors, licensed conveyancers, trade mark attorneys, patent agents, probate practitioners and members of the Chartered Institute of Legal Executives.

In October 2010 the Court of Appeal considered whether it is the status or function of a professional that should give rise to the privilege. The Court decided that privilege only applies to advice given by members of the legal professions and cannot be extended without the intervention of Parliament to someone who is not a lawyer even if the advice he is giving is legal advice and which he is competent to give.

Prudential had originally unsuccessfully sought to argue before the Special Commissioner on a judicial review application supported by the ICAEW that it was not obliged to disclose to HMRC any documents relating to legal advice they had obtained on tax matters, irrespective of whether such advice was obtained from lawyers or accountants, on the basis that all such documents were privileged.

The Court grappled with how to extend the privilege in practice and still make it clear to whom the privilege does and does not apply, especially given the difficulty in interpreting who is an “accountant.” What about legal advice given by non-lawyer pension consultants? And to which other professional advisers would the rule apply?

The Court of Appeal held that LPP does not extend to advice on tax law given by accountants, or anyone else, other than members of the legal professions: R (on the application of Prudential PLC & Anor) v Special Commissioner of Income Tax & Anor [2010] EWCA Civ 1094).

Prudential sought to overturn that decision in the Supreme Court. The Supreme Court was asked to decide whether the Court can change the common law to extend LPP or whether this is something that is Parliament’s prerogative.

Decision

The Supreme Court, by a majority of five to two, dismissed Prudential’s appeal. The reasons for the decision were threefold.

First, allowing Prudential’s appeal would be likely to lead to a clear and well understood principle becoming unclear and uncertain. The Court would have to explore issues such as what constitutes a profession and whether that profession is one which ordinarily provides legal advice. As Lord Neuberger put it, “there would be room for uncertainty, expenditure and inconsistency, if the court had to decide such an issue”.

Secondly, the question whether LPP should be extended to cases where legal advice is given of professional people who are not qualified lawyers raises questions of policy which should be left to Parliament, as they have wider powers of inquiry and consultation and are democratically accountable.

Finally, Parliament has recently enacted legislation which retains the principle of LPP being restricted to the legal profession.

Comment

The Judgment makes it clear that extending the parameters of this long-standing principle raises issues of policy which are for Parliament.

In support of Lord Neuberger, Lord Reed said: “More fundamentally, it is necessary to give consideration to the respective roles, in relation to the development of this area of the law, of the courts, the executive and the legislature. In doing so, it is necessary to have regard to the measures taken (or not taken) in this area by the executive and the legislature, after consultation and consideration of a wider character than can be carried out by courts determining disputes between particular parties”.

One thing is clear, the rules of LPP were established hundreds of years ago and since then the practice of law has changed and continues to change considerably. However, whether Parliament will make time in the legislative calendar to address LPP, is by no means clear. It is likely that there will be no further challenges to LPP brought through the Courts in the foreseeable future. 

Bodies licensed by the Legal Services Board will benefit from LPP. One area which may come under fresh scrutiny is the availability of LPP to in-house counsel. The extension of LPP to in-house counsel was made over forty years ago. Due to the remarkable changes the legal industry has experienced and the continued changes that we anticipate, this may well be the next area of challenge.

Local authorities should also be aware that the capacity in which a person gives advice may be relevant to the question of whether that advice is subject to privilege. In the Information Tribunal case Surrey Heath Borough Council & Keith McCullen v Information Commissioner EA/2010/0034, advice from a monitoring officer was found not to be privileged. The officer was a qualified solicitor but the Tribunal found that she had not given the advice in that capacity.

Mark Surguy
is a partner, Isabelle Makeham is a senior associate and Gareth Hill is a trainee solicitor at Eversheds. Mark can be contacted on 0845 497 1377 or by This email address is being protected from spambots. You need JavaScript enabled to view it.