In 2012 we look ahead to a ruling from the Supreme Court on whether the principle of Legal Professional Privilege can be extended to others operating outside of the legal profession. Such an extension may mean that accountants who offer legal advice to their clients on their financial duties and liabilities could assert Legal Professional Privilege, currently only afforded to the legal profession, over that advice.
What Is Legal Professional Privilege?
Legal Professional Privilege is a long established common law principle allowing communication obtained by a client from his lawyer, acting in a professional capacity and providing expert legal advice, to be withheld from disclosure under a Court process.
How Does It Work?
Under the cover of privilege, communications between client and lawyer are exempt from disclosure. This is intended to ensure that a client can be candid with his lawyer, secure in the knowledge that he will not have to disclose those communications at a later date. In order for privilege to be claimed, the communications must be confidential. If confidentiality is lost or waived then privilege will no longer apply. "Legal Advice Privilege" and "Litigation Privilege" are two distinct heads of Legal Professional Privilege, which have different rules and apply to different situations.
What Is The Current Position?
Legal Professional Privilege applies, as its name suggests, only to the legal profession. The principles are fundamentally associated with, and reflective of, the administration of justice. Historically, privilege has been limited in this way as the idea that evidence can be withheld runs contrary to the civil rules on disclosure and the fundamental principle that a case should be decided on the basis that all relevant evidence is made available to the parties and the court.
What Is Being Challenged By That Case?
In 2011, the Supreme Court granted a right of appeal to Prudential PLC and Prudential (Gibraltar) Ltd (together the "Prudential"), who argued that Legal Professional Privilege should be extended to cover legal advice provided by accountants who offer tax law advice on compliance with fiscal liabilities and/or duties. At present, there are very limited and specific statutory provisions relating to such exemption for accountants. By extension it was argued this loosening of the privilege principles should apply to all legal advice offered by accountants to their clients in the same way as is afforded to the legal profession.
Watch This Space........
If the Supreme Court rules in favour of extending the application of privilege it will see a change to common law rules that have their origins in the sixteenth century. If the Court upholds the current status and rules, privilege will continue to apply to the legal profession alone. Clients seeking specialist legal advice from accountants will have to continue to consider very carefully any implications that may arise from the later disclosure of such advice.
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