Still No Privilege for Financial Professionals

(Posted on 10/03/11)

As a lawyer, you enjoy privilege with your client; it's sacred and it's the foundation from which the legal sector is built on. It's in place to ensure you can effectively defend your client while protecting his and your rights. In recent years, tax advisers have sought to have that privilege extended to their profession, as well. This week, that request was struck down once more.

The case revolved, at least initially, around a suit Prudential filed in order to protect the advice it received from Pricewater Cooper. It didn't want HMRC to have access to that information and advice. So great was importance that it resulted in both the Law Society as well as the ICAEW entering the debate. Even with the latest judgment, this has proven to be one ferocious battle and just because a judgment's been entered doesn't mean the debate is a has-been.

Prudential must now decide what, if anything, it will do from this point forward. Many legal experts have suggested it will be taken to the next level, while other say its akin to beating a dead horse. There are other considerations, though. For one thing, accountants and other financial advisers would prefer some degree of privilege when working with their clients. It ensures a more open communication channel and discourages efforts of hiding assets and other financial dynamics. These professionals say it encourages an all around better working relationship. The legal sector, or at least the judicial sector, disagrees.

That said, there are those within the profession that are encouraging the big players to keep moving forward. This might mean an even longer and far more drawn out scenario; one that many accountants say is worth the wait. Lord Justice Lloyd seems to believe there exists a certainty and one that does "stand up to that test in practical terms".

Of course, in October, a new rule that goes into effect could change everything once again. Solicitors and accountants will be able to partner together in a single firm dynamic. This could potentially solve the problem in its entirety; then again, it could further complicate matters even more.

For now, nothing's changed. Accounting professionals who feel their clients need a bit of legal advice and more importantly, advice that will be protected by privilege will have to strongly encourage that client to seek legal representation.