LPP is rarely far away from the daily life of Money Laundering Reporting Officers and law firm risk teams.
Lakatamia Shipping Co Ltd v Su [2022] EWHC 3115 (Comm) addressed the application of the iniquity exception and provided a summary of principles to be applied, noting that the case law indicates that the power to override LPP is an exceptional remedy, only to be used with the greatest care.
The Court of Justice of the European Union judgment in Case C-694/20 Orde van Vlaamse Balies and Others held that the DAC6 cross-border tax reporting obligation breaches LPP. (See http://www.legalrisk.co.uk/News.) While this is a European case, it may still be relevant post-Brexit, even to firms without European offices, as privilege engages Article 6 (Right to a fair trial) and Article 8 (Right to respect for private and family life) of the European Convention on Human Rights, and the decision cites two decisions of the European Court of Human Rights which are binding.
In Trentside Manor Care Ltd & Others v Raphael [2022] EAT 37 the employer obtained advice from a specialist employment consultancy. The advisers were not a firm of solicitors, but had an HR and Employment Law advice team, headed by solicitors, and in which all but one of the managers was legally qualified; however, the individual client advisers were not. It was held that the advice was not protected by LPP.
Similar issues may apply when law firms are audited under regulation 21 of the MLR 2017 by, or seek advice from, non-lawyers, accountants and even non-practising solicitor consultants on matters such as AML compliance; we have previously drawn attention to the issue in relation to accountants having regard to the decision in R (on the application of Prudential plc) v Special Commissioner of Income Tax [2013] UKSC 1.
The Consultation paper, Looking to the future – flexibility and public protection, published by the SRA in June 2016, addressed the question whether advice provided by a solicitor employed by an alternative legal services provider (an entity not authorised by the SRA) would be protected by LPP; while identifying this as a question of law which the SRA has no power to determine, the paper concluded that it was very likely that LPP would not apply, and Passmore on Privilege (4th edition at 1-309) appears to endorse that view.
There is added significance in the case of a Regulation 21 audit, because of the requirement not only to examine and evaluate the adequacy and effectiveness of the policies, controls and procedures, but also to make recommendations in relation to them.
Legal Risk LLP is a firm of practising solicitors and we believe this is critical to ensuring that the advice firms receive from us on audit, and in relation to suspicious activity reporting, regulatory investigations and compliance is protected by LPP: in our experience, LPP issues tend to surface in the most difficult and sensitive circumstances.
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