COLP reports and privilege following the Carter-Ruck decision

The judgment related to production notices served under section 44B of the Solicitors Act 1974. However, the principle that the SRA is not entitled to require production of documents subject to a client’s unwaived LPP applies equally to documents and information obtained under the Codes of Conduct.

That means that COLPs, COFAs and solicitors who are under an obligation to provide the SRA with self reports face some very difficult decisions if the reports relate to client matters.

In this briefing, consultant Nigel West explores the implications of the High Court's decision in Carter-Ruck v SRA for COLPs, COFAs and solicitors, examining the interaction between self-reporting obligations and legal professional privilege.

The first step is to decide whether the reporting threshold has been reached under the codes of conduct, putting the issue of privilege to one side. That question - whether the reporting threshold has been reached - has not been changed by the Carter-Ruck decision. There is still an obligation to promptly report any facts and matters that you reasonably believe to be capable of amounting to a serious breach of the regulatory arrangements.

There is also an obligation to inform the SRA promptly of any facts or matters that you reasonably believe should be brought to its attention so that the SRA may investigate whether a serious breach of the regulatory arrangements has occurred (see rules 3.2 and 3.3 of the Code of Conduct for Forms and rules 7.3 and 7.4 of the Code of Conduct for Solicitors).

If the reporting threshold has been reached, the next step is to decide whether the report relates to privileged material. Most reports relating to client matters will involve LPP material. But that is not always the case. There is for example case law which provides that some bills of costs and some accounting records are not privileged.

If the matter relates to privileged material, it is possible that privilege has been waived, either expressly or impliedly by the client. There may for example be an express waiver in the firm’s terms and conditions, but care should be taken to establish whether a waiver of that type is sufficient. A waiver buried deep within the small print may not be treated as an effective waiver of a client protection of such importance as LPP.

If the matter relates to unwaived LPP material, the firm then faces some very difficult questions. Should the firm make any report at all if the information derives from privileged material? Or should the SRA be informed that the firm would be providing a detailed report but for the Carter-Ruck decision on LPP? Should the firm be asking the client whether privilege will be waived? What happens if the SRA asks the firm to check whether the client will waive privilege? Can the waiver be limited? Can the firm advise the client on waiver or is there a conflict of interest? If there is a conflict of interest should the client be advised to take independent advice, and who pays for the advice?

Some of the answers to questions of this type will depend on the particular circumstances of the case. Other answers are likely to be uncertain and fraught with difficulty. The COLP may well have to decide how best to prioritise the competing objectives of protecting client privilege, preserving public confidence in the profession and taking steps to avoid SRA criticism of the firm whilst the Carter-Ruck decision proceeds through the appellate courts.

Nigel West has acted for solicitors facing SRA investigations and disciplinary proceedings for over 20 years. He advises individual solicitors and law firms on all stages of the disciplinary process, from SRA investigations to SDT proceedings and appeals, and is ranked in Chambers and recognised in the Legal 500 Hall of Fame for his professional discipline work.