Let me start with an apology. I appreciate that this is the second time I’ve blogged about this rather dry subject this year. However, after April’s blog on the subject (Privilege and adjudication revisited), a friend of mine pointed out a twist which may mean that non-solicitor firms offering claims consultancy services can rely on legal advice privilege after all.
Let me explain.
R (Prudential plc and another) and the Legal Services Act 2007
You may recall that in R (Prudential plc and another), the Supreme Court confirmed that common law legal advice privilege is limited to solicitors and barristers. However, my friend pointed out that the Legal Services Board (LSB) was granted permission to make submissions to the Supreme Court on the matter.
The LSB made the point that subsections 190(3)-(5) of the Legal Services Act 2007 (LSA 2007) provide for legal advice privilege to attach to communications relating to services provided to a client by a “licensed body” where the individual through which the alternative business structure provides those services is:
- A “relevant lawyer” (solicitor, barrister or other authorised persons).
- Acting at the direction and under the supervision of a “relevant lawyer”.
The privilege applies only to the extent that it would have done if the individual or their supervisor had been providing the services directly to the client. Ultimately, the Supreme Court did not deal with the point in any detail, but it is certainly worth exploring.
Licensed bodies and alternative business structures
So what is a “licensed body” I hear you ask? Well it includes an alternative business structure (or ABS). While I appreciate that the solicitors reading this are likely to be aware of ABSs, non-solicitors may well not be. They arose out of the LSA 2007 and allow non-lawyer professionals to have ownership and managerial roles in law firms. The media referred to it as “Tesco law” and it has allowed the large accountancy firms (such as PwC) to branch out and provide legal services.
Under the LSA 2007, only one of the managers needs to be a solicitor or other authorised person in order to become an ABS. Therefore, if a firm of claims consultants working in adjudication has at least one solicitor-manager and becomes an ABS, and that solicitor-manager supervises surveyors, engineers, non-practicing barristers and para-legals who are offering legal advice, then it seems that statutory legal advice privilege would apply to their advice. If so, this could overcome the Supreme Court’s decision that common law legal advice privilege is limited to solicitors and barristers.
Not plain sailing for claims consultants
However, while the above analysis appears simple, I can foresee problems, for example:
- Becoming an ABS is not simply a case of employing one solicitor-manager. Rather, it also involves applying to the SRA for a license, appointing compliance officers and so on. While some non-solicitors firms offering claims advice might already be regulated by bodies such as RICS, they are likely to find the SRA’s regulation more stringent.
- The level of supervision the solicitor-manager needs to provide under section 190 of the LSA 2007 is unclear.
- Non-solicitor firms offering claims advice might be in for a shock when it comes to professional indemnity insurance premiums for ABS’s, which I suspect are likely to be significantly higher than they are used to. I was speaking to one sole practitioner solicitor recently who said that, if he stopped practicing as a solicitor and simply acted as a claims consultant, his PI premiums would reduce by 90%.
Is all of this worth it just so general legal advice is covered by legal advice privilege? I’ll let you decide for yourself, but I concluded in my last blog that it is likely that litigation privilege applies to the advice provided in connection with adjudication.
I promise there will be no more blogs on privilege in 2014 (although I have got my fingers crossed, just in case)!