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)!
3 thoughts on “Could legal advice privilege apply to claims consultants after all?”
A thought-provoking blog.
It would be interesting to see if any of the big surveying firms do look to set up a captive law firm to manage claims work (more likely I suspect than converting wholesale to an ABS). Apart from the PII and regulation issues (e.g. need to comply with money laundering regs, need to appoint a COLP and COFAS, run regular diversity surveys etc.) there are other factors to consider. For example, the firm would find itself governed by the solicitor’s conduct rules – RICS advocacy rules do not (when I last checked) prohibit recklessly misleading the tribunal (although I would hope that they would not as any resulting settlement would be vulnerable to a fraudulent misrep claim).
Given the legal complexity of contentious work, I would also be surprised if a single lawyer could adequately supervise the work of the whole firm as you suggest. As a related point, I suspect that the standard of care required when giving legal advice would be higher for a regulated law firm, so you might find yourselves at increased risk of a negligence claim from disgruntled clients.
In any event, legal advice privilege only attaches to legal advice. To the extent that the firm is providing, say, QS services these will not be caught by privilege. As such, this might not offer the protection that you would hope for.
In practice, privilege does not seem to be that much of an issue for claims consultants. I have frequently had claims consultants arguing that their advice and claim preparation work was not carried out in contemplation of litigation – usually in an attempt to argue that their fees should be recoverable as part of the claim itself rather than treated as litigation costs.
If 50% of owners and managers have higher rights of audience, then a claims consultancy may be able to be regulated by the BSB rather than the SRA, if the BSB gets permission to regulate entities.
The regulatory regime under the BSB would probably be a lot lighter.
Simon – many thanks indeed for your comprehensive comments.
You make some very valid points. The only thing I would point out is that the 2nd edition of the RICS Practice Statement and Guidance Note, “Surveyors acting as advocates”, would prohibit “recklessly misleading the tribunal”. The PS & GN imposes similar obligations to the SRA and BSB standards, and was drafted by a group comprising solicitors, barristers and surveyors.
Comments are closed.