Privilege denied

There’s nothing like a dust up between professionals to raise the spirits of ordinary working folk and over the last few weeks lawyers and accountants have done their best to provide an entertaining cat fight.
Granted, on the face of it, the issue triggering the scrap – legal professional privilege -- is not high on the public agenda. But nonetheless, the sight of leading members of the university educated, brass plaque brigade hurling yaboo suck insults at each other is enough to bring a warm glow to any respectable street sweeper’s face.

Crying in their soup

Triggering the playground-style tussle was a ruling from the UK Supreme Court late last month dismissing the idea that advice from accounts be afforded the same privilege status as that from lawyers in relation to tax matters. Lawyers didn’t hold back in their celebrations – viz the triumphalism of Peter Clough, head of disputes at international law firm Osborne Clarke: ‘Tax accountants will be crying into their soup tonight, and tax lawyers will be dancing in the streets.’
Mr Clough went on to sprinkle a dash more salt into bleeding accountants by summarising the ruling as presenting clients with a ‘clear cut choice ... if you want confidential tax advice, you’re better off going to a law firm. Accountants will no doubt think it is unfair, as it will drive clients concerned about maintaining confidentiality in advice provided to them into the welcoming arms of law firms.’

Posturing

For the solicitor branch of the profession, the chief executive of the Law Society of England and Wales, Des Hudson, was a bit more obtuse, but there was still a sense of victory in his post-judgment ruminations. 'A lawyer's duties and responsibilities to the client and to the courts are not available on a pick 'n' mix basis,’ he claimed, before focussing on the point: ‘The relationship between a solicitor or barrister and his or her client is a precious human right, tested and refined by centuries of common law. Legal professional privilege supports the process of law, speeding the conviction of the guilty and securing the acquittal of the innocent.'
Apart from that grandiose posturing, the crux of the matter is all about commercial advantage. At a time when clients – both high-net worth individuals and multi-national corporations – are facing an ever-harsher government glare on their tax affairs, being able to provide privileged advice is a considerable competitive advantage. Lawyers have got it and they don’t want to lose it – especially in the UK, where the legal profession has witnessed the gradual but steady ebbing of its monopoly fields of work for more than two decades.

Short-lived gloating

But lawyer gloating as a result of the Supreme Court ruling could be relatively short lived. Leading accountancy bodies are not exactly doffing their caps in the style of a 1950s cricket batsman, who, on hearing a faint knick as ball hits bat before scorching into the wicketkeeper’s gloves, walks off the pitch without waiting for the umpire to adjudicate. They are regrouping and preparing to re-engage.
The Law Gazette newspaper last week ran a page one story saying England’s biggest accountancy body, the Institute of Chartered Accountants, would soon launch a lobbying campaign in a bid to woo MPs and eventually spawn monopoly-busting legislation. And in an exclusive interview with The Post, the institute’s head of business law, Felicity Banks, confirmed that if the common law process isn’t working, then accountants will go down the legislation route. ‘The next step will be to raise the matter at a political level,’ comments Ms Banks. ‘If we can’t get evolution through the common law, we’ll have to get it done through statute.’

Client benefits

But apart from the obvious commercial advantages to accountants, will clients benefit from an expanded privilege regime? Absolutely, yes, maintains Ms Banks: ‘Extending privilege would be in the public interest. In England, it is widely acknowledged – including by all the Supreme Court judges – that most legal advice on taxation matters is provided by accountants. That position has been market driven and arrived at because most accountants do it better than most lawyers. We do more on tax in our basic exams, we more often have in-depth relationships with our clients. It is generally cheaper and easier for clients to go to their accountant for tax advice rather than lawyers.’
Therefore, runs her logic, the current monopoly -- while boosting the coffers of tax specialist lawyers -- puts clients at a distinct disadvantage. Indeed, Ms Banks maintains that some in the legal profession have been cravenly playing on that advantage: ‘Lawyers have increasingly been marketing their tax advisory services on the following basis: come to us, because we won’t have to tell the tax authorities. It is in the public interest for that to change because if legal advice privilege is a right of the client, it should be the right of the client regardless of which properly regulated professional is providing the advice.’

Changing hearts and minds

Ms Banks acknowledges that changing hearts and minds in the British parliament won’t happen overnight. ‘It took close to a generation of lobbying before there was even an acceptance in principle of partnership between accountants and lawyers. We are prepared to be patient.’
In the medium-term, Ms Banks predicts the Supreme Court ruling will hasten the desire of some accountancy firms to apply for alternative business structure status in England and employ solicitors who will be able to attract legal advice privilege for their clients. ‘It is a very weird anomaly,’ she maintains ‘that a senior tax partner in a professional firm cannot generate legal advice privilege for a client unless he is supervised by a solicitor, who under current Solicitor Regulation Authority rules need have  no more than two years post-qualification experience.’