Suppose two companies, Company A and Company B, are concerned about a tax-related issue and prudently decide to get professional legal advice. Company A seeks advice from a law firm, while Company B goes to a firm of tax advisers. Both recount substantially the same facts to their respective advisers and receive substantially the same legal advice. Are they both entitled to claim legal advice privilege and to refuse to disclose the information given and the advice received if later required to do so? The UK Supreme Court thinks not.
In a significant, though not unexpected, ruling delivered yesterday, the UK Supreme Court confirmed that legal advice privilege only covers legal advice given by a member of the legal profession. Company B in our example above would have to disclose the advice it received in any subsequent proceedings, which could damage its case.
Legal advice privilege attaches to all communications passing between a client and his lawyers, acting in their professional capacity, in connection with the provision of legal advice, i.e. advice which relates to the rights, liabilities, obligations or remedies of the client. Where it applies, the client is ordinarily entitled to object to any party seeing the communication for any purpose (although certain limited exceptions may apply).
The decision does not affect litigation privilege which continues to apply to communications made between a client and his lawyers or other professional advisers where legal proceedings are pending or reasonably contemplated.
In the case before the UK Supreme Court, the insurance company Prudential sought to assert the privilege in respect of legal advice given to it by the international accountancy firm, PricewaterhouseCoopers on a tax scheme implemented by the company. The Court, by a majority of 5:2, held that the privilege did not apply.
Majority
The majority accepted that logically it is difficult to see why privilege should apply to communications with legal advisers who happen to be qualified lawyers, but not to communications with other professionals qualified to give expert legal advice in a particular field. However, they considered that extending the scope of the privilege to legal advice given by non-lawyers would be likely lead to uncertainty and inconsistency. How would the courts decide which professions were covered? Take accountants, for example. Many accountants do not ordinarily give legal advice, but many others do. If privilege was to be extended, would it be extended by reference to the accountancy profession generally, a particular branch of the profession or the practice of the particular member of the profession? This was one of the many issues which the majority said would create difficulties.
The majority were firmly of the view that privilege should be based on a principle which is clear, certain and readily understood. This is already achieved under the current system. If there are policy reasons as to why this should be changed, the matter should be left to Parliament.
Dissenting Judges
The two dissenting members of the Court could see no persuasive reason as to why the privilege should not be extended to advice given by a member of a profession which has as an ordinary part of its function the giving of skilled legal advice on the subject in question. They took the view that as the privilege is the right of the client, it cannot depend on the status of the adviser. Logically, they said, it must follow that legal advice given by an accountant should attract the privilege in circumstances where it would have done so had the advice been given by a solicitor or barrister.
Position in Ireland
The decision of the UK Supreme Court is not binding on the Irish courts, but it would certainly be persuasive authority. Pending a ruling on the issue from an Irish court, it is very important for clients to exercise caution when taking legal advice from anyone other than a solicitor or barrister as they will not be entitled to claim legal advice privilege in those circumstances.
Contributed by Sinead Kelly.
