Coleman: Solicitors on horns of a dilemma
Solicitors asked by their regulator to hand over privileged client material should ask for a delay while the High Court considers the issue, a KC has advised.
Richard Coleman KC said a newly discovered exchange during the passage of the then Legal Services Bill through Parliament in 2007 had thrown further doubt on whether the Solicitors Regulation Authority (SRA) has the power it claims to examine legally privileged material as part of investigations.
We reported last year [1] that this is being challenged by businessman Mohamed Amersi and his solicitors, top London media firm Carter-Ruck.
SRA guidance says it can look at privilege documents and information for regulatory purposes.
The claimants are seeking a declaration that the SRA’s use of production notices under section 44B of the Solicitors Act for the disclosure of privileged material is unlawful.
Speaking at an event hosted yesterday by his set, Fountain Court Chambers, and City law firm Simmons & Simmons as part of London International Disputes Week, Mr Coleman noted that all three of the textbooks on privilege questioned whether the SRA did have this power, given the caselaw.
He continued that there was “one final twist in the story which I think may be the most significant point of all”, namely a bid by the Conservative opposition in March 2007 to amend what became the Legal Services Act so as to give the Law Society, as the approved regulator of solicitors, the express power to demand the production of confidential and privileged material.
In response, minister Baroness Ashton said: “We do not accept that because there are real sensitivities in relation to allowing a regulator to override professional privilege or have unfettered access to material of a confidential nature in the way proposed.
“At this stage, we are not persuaded that the Law Society has made the case for this power.” The amendment was abandoned.
Mr Coleman said: “The implications of what happened in Parliament have not, as far as I’m aware, received any attention in the books and certainly not in the SRA’s own guidance.
“It seems to me that the minister’s own statement is arguably admissible [before the court] in accordance with the rule of Pepper v Hart to resolve any ambiguity as to whether 44B enables the SRA to take privileged materials.”
If the court upheld the challenge, the silk went on, it would have “major implications” for how the SRA investigated misconduct – but in the meantime, solicitors facing a section 44B notice were on “the horns of a dilemma”.
Mr Coleman explained: “If the SRA is right about the law, then if solicitors refuse to provide the documents, they risk breaching their duty of co-operation to the SRA and indeed 44B is underpinned by criminal sanctions.
“But if the SRA is wrong about the law, then solicitors risk breaching the duty they owe to their clients because they generally have a duty to protect the client’s privilege where it applies.
“It seems to be that anyone in the meantime who’s presented with a 44B notice while the Carter-Ruck claim remains unresolved should seriously consider inviting the SRA to await the outcome of at least the first instance decision.
“How the SRA might respond to that request, one can only speculate.”
Asked what would happen if the High Court found against the SRA, Mr Coleman predicted that solicitors who had handed over privileged material would probably not have much to worry about “given that they were acting consistently with the SRA’s guidance”.
He added: “I think there may be questions about the SRA’s position and whether perhaps the issue should have been grappled with before now.”