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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

Understanding Business Crime Defence: How to Protect Privilege

Author: Azizur Rahman  14 May 2013
6 min read

The Supreme Court has decided that legal professional privilege (LPP) only applies to qualified solicitors and barristers. It is a decision that emphasises the need for companies and individuals to ensure they gain the maximum benefit possible from their relationship with their legal representatives.

It has often been said that not everyone can enjoy a privileged life. Now that seems to have been proved beyond any doubt; at least legally speaking. In the case of Prudential PLC and Prudential (Gibraltar) Ltd V Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes), the Supreme Court has decided by a majority of 5 to 2 that LPP is only applicable to qualified lawyers.

LPP gives communications between a lawyer and their client complete confidentiality. Such communications cannot be disclosed to any third party – even a courtroom or investigating authority – without the consent of the client. In its case, Prudential had asked the court to declare that LPP extended to advice given to it by its accountants regarding a tax avoidance scheme. But the Supreme Court agreed with the Court of Appeal and stated that extending LPP to communications between a client and other professionals, such as accountants, could only be instigated by an Act of Parliament.

In stating that it was not for the courts to make such changes, Lord Neuberger said:

“…we should not extend LPP to communications in connection with advice given by professional people other than lawyers, even where that advice is legal advice which that professional person is qualified to give.

“I reach this conclusion for three connected reasons, which together persuade me that what we are being asked to do by Prudential is a matter for Parliament rather than for the judiciary.

“First, the consequences of allowing Prudential’s appeal are hard to assess and would be likely to lead to what is currently a clear and well understood principle becoming an unclear principle, involving uncertainty.

“Secondly, the question of whether LPP should be extended to cases where legal advice is given from professional people who are not qualified lawyers raises questions of policy which should be left to Parliament.

“Thirdly, Parliament has enacted legislation relating to LPP which, at the very least, suggest that it would be inappropriate for the court to extend the law on LPP as proposed by Prudential.’’

In its briefest form, therefore, LPP cannot be extended to other professions because it would lead to confusion over exactly where it could be used, because it is really a matter for Parliament to decide on and because current law does not seem to want the courts to extend LPP.

The court ruling has been welcomed by the Law Society. Its chief executive Desmond Hudson stated that LPP that exists between a lawyer and their client is a “precious human right, tested and refined by centuries of common law’’ and claimed that it supports the process of law; speeding the conviction of the guilty and securing the acquittal of the innocent. Such sentiments are likely to be echoed in legal practices throughout the land as LPP has been a cornerstone for effective representation of a client in all manner of legal cases down the centuries.

Broadly speaking, privilege attaches itself to documents or other material that relate to the taking or receiving of advice or instructions relating to actual or potential litigation.

So what, if anything, does the Prudential case tell us about the law regarding cases of fraud, business crime or regulatory matters? While it is crucial to note that the Prudential case is an important one in the history of LPP, it is one that has confirmed and re-emphasised existing law rather than changed it. The outcome is notable for what it has not allowed to happen – LPP is not being extended. And yet although the case has not changed the law, it is certainly a strong reminder of the importance of LPP. For that reason, it should serve as a prompt for companies or individuals who ever find themselves in the midst of an investigation and need to know just what rights and protection LPP gives them. Certainly, LPP protects any discussions between a lawyer and their client. But privilege is a factor that can be used to protect a person’s interests far beyond any conversations they may have with their legal representative.

At Rahman Ravelli, we are fully familiar with the rights extended to a client under LPP and the protection these can give someone who is under investigation. We handle cases where the issue of privilege can be relevant in all manner of circumstances that can arise when an investigation begins. Issues such as dawn raids, seizure of documents and other potential items of evidence and the admissibility in court of such evidence can become crucial factors. And they are all factors that can be affected by privilege.

When allegations are made against a person or company, they can be as specific or as vague as the person making them wants them to be. The task then is for investigating and prosecuting agencies to try and find the evidence to back up the allegations, thus giving them a chance to mount a prosecution and secure a conviction. If they carry out a dawn raid, it is likely to be done for the exact purpose of finding anything that could be incriminating evidence – written reports, computer records, bank account details, email transcripts, contracts, memos or anything else that gives the investigators information about how that person or company was functioning. All too often, the person or company being raided is not sure exactly what the authorities are entitled to take away. The Police and Criminal Evidence Act 1984 (PACE) states that authorities should only take away material relevant to the investigation. But in situations where the investigators may not know precisely what it is they are searching for there is the chance they will simply try to take as much as possible; in the hope that some of what they remove will prove useful once they start working their way through it. And in such situations, the person being raided will often have no idea what the raiding authority is entitled to take under the terms of PACE. That person, therefore, feels unable to stop anything being taken.

But privilege can be used to stop the raiders riding roughshod over a person’s rights. For example, a person can argue that certain digital material cannot be taken because it is subject to LPP. The Supplementary Attorney General’s Guidance – The Guidance on Disclosure of Digitally Stored Material (2011) has laid down what is appropriate regarding seizure of high-tech data. Sections of the Criminal Justice and Police Act have determined what the police can do when it comes to “search and sift’’ – the seizing of material which is searched later for relevant information. By using privilege, a person can defend their right to hold on to items that the raiders may wish to take from them. But a person wanting to do this has to be systematic in their use of exercising privilege. Items (whether in electronic or hard copy form) must be marked privileged. Ideally, they should also be stored in a separate place under lock and key, so that no one can take them without having to ask any questions.

Marking something as privileged, however, will never be enough. If the investigators know or believe that the person they are about to raid will claim that certain materials are privileged they may bring independent legal counsel with them. During the raid, counsel will decide whether items the raiders want to take are privileged. Such a situation is better than having the raiders take everything without the person being raided having independent counsel to turn to if they believe privileged materials are being seized. But whether the counsel is there or not, the only real safeguard when it comes to protecting legally privileged material is having your own legal representative present during the raid. The legal representative has to be an expert in this specific field as the legal arguments may not cease when the raid ends. If the person raided believes that privileged material was taken they can meet with the raiders and the independent counsel later to review what materials were taken and whether any were privileged. In such meetings, only the right legal representation will ensure the best possible chance of persuading counsel that items are privileged and, therefore, should not be available to the raiding authorities. Should the raided person’s legal representative and independent counsel still fail to reach agreement on what materials are privileged, the matter can go before a court. The way that disputes over what is privileged can move from the raided premises to the conference room and even the courtroom indicates what a challenging legal area this can be. That is why it is best for the raided person to have a specialist legal representative at the outset. Defending privileged materials from the very start of any raid could prevent much dispute further down the line.

Adopting such practices will never be a 100% guarantee against a raider eventually succeeding in taking something from a person as part of an investigation. It may take them longer than they imagined – and even involve a legal hearing – but they may eventually obtain it. But if an investigating authority is raiding a premises on little more than a “fishing’’ exercise in the hope of finding something (or anything) that could lead to a prosecution, arguing that items are privileged can stop them in their tracks. The authorities will at least have to take time to consider the privilege argument. That time could be a vital breathing space for the raided person looking to challenge the validity of the raid. Faced with the options of either being cleaned out in a raid and left with nothing or using the argument of privilege to protect some of your most vital data, the choice is a clear one.

The right of privilege may not have been extended. But for lawyers and their clients, its use remains a potent protection.

Azizur Rahman C 09369

Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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