Bennett: Check the lawful basis for any disclosure
The Solicitors Regulation Authority (SRA) has been left as “little more than a paper tiger” by yesterday’s High Court ruling on privileged material, it has been claimed.
Campaigners have called for legislation to overturn Mr Justice Butcher’s decision [1] that the regulator does not have the right to require the production of privileged documents from law firms without the client’s waiver.
The ruling also raises the prospect of solicitors who have been sanctioned as a result of the SRA using privileged material seeking to overturn their punishments.
It followed a challenge brought by leading media law firm Carter-Ruck and its client, Mohamed Amersi.
Dr Helen Taylor, deputy director of Spotlight on Corruption, said: “This ruling is a major blow for the SRA – and for the public interest – in holding lawyers to account, and leaves the legal regulator little more than a paper tiger.
“The SRA simply cannot do its job if the inner workings of a law firm are a black box. 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.”
Susan Coughtrie, co-founder and co-chair of the UK Anti-SLAPP Coalition, agreed: “The judgment is deeply concerning, and will leave the SRA completely toothless when it comes to tackling SLAPPs [strategic lawsuits against public participation] and holding lawyers accountable for abusive litigation conduct.
“This case arose from a SLAPP investigation by the regulator, and the inspection of privileged communications can often be the only way in which the SRA can determine whether a solicitor has breached their professional obligations.
“The impact of legal threats start long before a case reaches the court, and in the early stages the conduct, actions and strategies pursued by legal professionals on behalf of their clients are critical, and must be reviewed as part of any investigation into potential misconduct.”
Legal regulation specialist Paul Bennett, a partner at Bennett Briegal, said the decision should not be viewed as being about the SRA or a law firm “but about the certainty of LPP – the privilege safeguard extends beyond the parties”.
Mr Bennett said it had long been necessary to ask clients to share the material or ask the SRA to clarify what was sought so as to exclude privileged materials.
“This case has brought to the court an issue specialist advisers to law firms under investigation have grappled with for many years.
“For law firms and solicitors facing SRA scrutiny, the decision reaffirms that checking the lawful basis for any disclosure remains key. In a couple of recent investigations, we have invited the SRA to narrow its requests and acknowledge this issue; material can then be eliminated to protect privilege.”
Where the SRA has, in light of this ruling, misapplied privilege and obtained information unlawfully, “I fully expect defendant law firms and individual solicitors to challenge any investigation and any outcomes imposed,” he went on.
“The judgment draws attention to instances where the SRA has asked the SDT for anonymous elements of decisions due to privilege; inevitably, the SRA will be expected to address any misapplication in its own approach.”
Mr Bennett noted that privilege was protected using statutory exemptions when a production order was made by a Crown Court judge against a law firm under the Proceeds of Crime Act 2002.
“This rather invites the question: if law enforcement can respect LPP in complex cases, why would Parliament grant the SRA a power exceeding that which undermines the justice system as a whole?”
Michael Stacey, a partner at London firm Russell-Cooke, observed that the decision meant there was “an inconsistency between the position where the SRA intervenes into a solicitor’s/firm’s practice – in which case it is entitled to client privileged documents – and the position where it is merely investigating potential misconduct”.
This could make the SRA “more inclined to exercise its draconian power to intervene into a firm”.
Writing on LinkedIn, he added: “This is the latest example which illustrates that the statutory framework for the regulation of legal services is an unsatisfactory patchwork of now quite historic legislation which was retained with some modifications when the Legal Services Act was overlaid on it twenty years ago.
“The ambiguities which the court has addressed in this case and in the recent Mazur case on the ‘conduct of litigation’ reserved activity underscore that a comprehensive modern statutory code is needed.”
Claire Cross, partner at City firm Corker Binning, agreed the decision was a “huge blow” to the SRA and would make its job “far more difficult”.
But she stressed that LPP did not arise as an issue in most SRA investigations, and where they were triggered by a client’s complaint, LPP was impliedly or explicitly waived.
The disruption would be felt most acutely in cases involving allegations of abusive litigation, like SLAPPs.
“To prove a SLAPP-style offence, the regulator must demonstrate that a law firm deliberately pursued a groundless case or weaponised hostile litigation strategies.
“Without access to the confidential case file, the SRA cannot verify if the firm genuinely assessed the strengths of the claim or intentionally used the legal process to intimidate a target.”
Oliver Schneider-Sikorsky, partner at BCL Solicitors, which acted for Carter-Ruck and Mr Amersi, said: “The greater certainty provided by the decision benefits all clients by helping solicitors identify and safeguard privileged information while engaging constructively with regulatory requests.”
- See also Iain Miller’s blog: The SRA and privileged material – this is not the end
- Paul Bennett will be speaking at a session on what to do when the SRA launches an investigation into your firm at the Legal Futures Regulation & Compliance Conference [2] on 3 December in London.