The High Court has found that the Solicitors Regulation Authority (SRA) cannot compel the production of documents protected by legal professional privilege, in a ruling met with surprise by practitioners and dismay by the solicitors' regulator for England and Wales.
Mr Justice Butcher ruled in Carter-Ruck Solicitors & another v SRA that section 44B of the Solicitors Act 1974 does not override legal professional privilege (LPP) where the client has not waived it, as had previously been widely undertood.
The litigation follows an investigation into the conduct of specialist media firm Carter-Ruck while acting for businessman Mohamed Amersi.
The ruling overturns a common understanding of section 44B that the SRA had used for decades to obtain privileged material.
As Will Glassey of HSF Kramer explained, writing on LinkedIn: “The SRA's power was said to rest on a ‘statutory override’ of the client’s privilege in section 44B… or alternatively, on the SRA’s view that sharing privileged materials with the regulator of law firms occurs in a protected environment which does not infringe the client’s privilege.”
However, Butcher held that the section in question contained no express words overriding LPP and, on proper construction of the law, it did not necessarily imply that either.
Nor was he “persuaded that what would be involved in a finding that s. 44B did not constitute a statutory override of LPP would constitute ‘stultification’ of any part of the purpose of providing for proper investigation of solicitors, as opposed to ‘impeding’ that purpose”.
He rejected the SRA’s argument that he was bound by previous appellate decisions and first-instance findings going back more than 50 years.
He ruled: “Whether or not there is a statutory override of LPP will make no difference to the ability of the SRA to properly investigate most cases where an investigation is required. Even where documents/information subject to the client’s (unwaived) LPP might be relevant, it may not be crucial or decisive.
“In my view, the fact that there may be some proportion of a limited category of cases in which the investigation cannot be performed as thoroughly as is desired by the SRA, or even cannot be performed at all, falls within the category of there being an impediment to the fulfilment of the statutory purpose, rather than its stultification.”
Jonathan Peddie, SRA executive director of investigations, enforcement and litigation, said the SRA would be seeking permission to appeal.
He said it was "vital that we have access to all relevant evidence when investigating potential wrongdoing” and that “our ability to get to the truth of many matters may be compromised if we can no longer access information protected by LPP”.
Reaction was swift, with Michael Stacey of Russell-Cooke calling the decision “a real headache for the SRA [which] will constrain its ability to investigate potentially serious misconduct”.
He added: “If the SRA is reliant on client consent to obtain privileged material, it may be hamstrung in some cases, particularly where the client’s interests in resisting production align with their solicitor’s interests.”
Dr Helen Taylor, deputy director of Spotlight on Corruption, said: "This ruling… leaves the legal regulator little more than a paper tiger”, adding that “after decades of complacency about a power assumed to exist, this judgment should be a real wake-up call for Parliament to urgently put these powers beyond challenge".
However, Patricia Robertson KC, of Fountain Court, said, in her experience, “the ability to defend by reference to privileged material is often critical in persuading the SRA that what looked at first to warrant investigation is in fact on the right side of 'walking the line'”. That meant, she said, “solicitors would need to be given the benefit of the doubt on points that might be illuminated by privileged material [by the SRA].”
Such a course would “require a major reset on the part of a regulator who has hitherto been very willing to allege lack of integrity or even dishonesty on, many of us might say, very slim grounds”.
A spokesperson for Carter-Ruck said: “This is clearly a landmark decision for the legal profession and its clients, but at its heart is a simple but fundamental principle – namely that, in the absence of an express statutory requirement to the contrary and with very few exceptions, a client’s LPP is sacrosanct.”
Justin Rushbrooke KC of 5RB and Richard Howell of Brick Court (instructed by BCL Solicitors) appeared for the claimants, and Tamara Oppenheimer KC and Philip Ahlquist, both of Fountain Court (instructed by Jenner & Block), appeared for the SRA.
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