Contents
6.1 General comments
Solicitors are under a duty to keep the affairs of their clients confidential, and the circumstances in which they are able to disclose client communications are strictly limited.
However, sections 327 - 329, 330 and 332 of POCA contain provisions for disclosure of information to be made to SOCA.
Solicitors also have a duty of full disclosure to their clients. However, sections 333A and 342 of POCA prohibit disclosure of information in circumstances where a SAR has been made and/or where it would prejudice an existing or proposed investigation.
This chapter examines the tension between a solicitor's duties and these provisions of POCA. Similar tensions also arise with respect to the Terrorism Act and you should refer to the Law Society's practice note on anti-terrorism in those circumstances.
This chapter should be read in conjunction with Chapter 5 of this practice note and if you are still in doubt as to your position, you should seek independent legal advice. The Law Society's AML directory may be of assistance in locating a solicitor who practises in this area of law.
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6.2 Application
This chapter is relevant to any solicitor considering whether to make a disclosure under POCA.
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6.3 Duty of confidentiality
A solicitor is professionally and legally obliged to keep the affairs of clients confidential and to ensure that his staff do likewise. The obligations extend to all matters revealed to a solicitor, from whatever source, by a client, or someone acting on the client's behalf. See chapter 4 of the SRA Handbook.
In exceptional circumstances this general obligation of confidence may be overridden. See chapter 4 of the SRA Handbook. However, certain communications can never be disclosed unless statute permits this either expressly or by necessary implication. Such communications are those protected by legal professional privilege (LPP).
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6.4 Legal professional privilege
6.4.1 General overview
LPP is a privilege against disclosure, ensuring clients know that certain documents and information provided to lawyers cannot be disclosed at all. It recognises the client's fundamental human right to be candid with his legal adviser, without fear of later disclosure to his prejudice. It is an absolute right and cannot be overridden by any other interest.
LPP does not extend to everything lawyers have a duty to keep confidential. LPP protects only those confidential communications falling under either of the two heads of privilege - advice privilege or litigation privilege.
For the purposes of LPP, a lawyer only includes solicitors and their employees, barristers and in-house lawyers.
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6.4.2 Advice privilege
Principle
Communications between a lawyer, acting in his capacity as a lawyer, and a client, are privileged if they are both:
- confidential
- for the purpose of seeking legal advice from a solicitor or providing it to a client
Scope
Communications are not privileged merely because a client is speaking or writing to you. The protection applies only to those communications which directly seek or provide advice or which are given in a legal context, that involve the lawyer using his legal skills and which are directly related to the performance of the lawyer's professional duties [Passmore on Privilege 2nd edition 2006].
Case law helps define what advice privilege covers.
Communications subject to advice privilege:
- a solicitor's bill of costs and statement of account [Chant v Brown (1852) 9 Hare 790]
- information imparted by prospective clients in advance of a retainer will attract LPP if the communications were made for the purpose of indicating the advice required [Minster v Priest [1930] AC 558 per Lord Atkin at 584].
Communications not subject to advice privilege:
- notes of open court proceedings [Parry v News Group Newspapers (1990) 140 New Law Journal 1719] are not privileged, as the content of the communication is not confidential.
- conversations, correspondence or meetings with opposing lawyers [Parry v News Group Newspapers (1990) 140 New Law Journal 1719] are not privileged, as the content of the communication is not confidential.
- a client account ledger maintained in relation to the client's money [Nationwide Building Society v Various Solicitors [1999]P.N.L.R. 53.]
- an appointments diary or time record on an attendance note, time sheet or fee record relating to a client [R v Manchester Crown Court, ex p. Rogers 1999] 1 W.L.R. 832]
- conveyancing documents are not communication so not subject to advice privilege [R v Inner London Crown Court ex p. Baines & Baines [1988] QB 579]
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Advice within a transaction
All communications between a lawyer and his client relating to a transaction in which the lawyer has been instructed for the purpose of obtaining legal advice are covered by advice privilege, not withstanding that they do not contain advice on matters of law and construction, provided that they are directly related to the performance by the solicitor of his professional duty as legal adviser of his client. [Three Rivers District Council and others v the Bank of England [2004] UKHL 48 at 111]
This will mean that where you are providing legal advice in a transactional matter (such as a conveyance) the advice privilege will cover all:
- communications with,
- instructions from, and
- advice given to
the client, including any working papers and drafts prepared, as long as they are directly related to your performance of your professional duties as a legal adviser.
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6.4.3 Litigation privilege
Principle
This privilege, which is wider than advice privilege, protects confidential communications made after litigation has started, or is reasonably in prospect, between either:
- a lawyer and a client
- a lawyer and an agent, whether or not that agent is a lawyer
- a lawyer and a third party
These communications must be for the sole or dominant purpose of litigation, either:
- for seeking or giving advice in relation to it
- for obtaining evidence to be used in it
- for obtaining information leading to obtaining such evidence
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6.4.4 Important points to consider
An original document not brought into existence for these privileged purposes and so not already privileged, does not become privileged merely by being given to a lawyer for advice or other privileged purpose.
Further, where you have a corporate client, communication between you and the employees of a corporate client may not be protected by LPP if the employee cannot be considered to be 'the client' for the purposes of the retainer. As such some employees will be clients, while others will not. [Three Rivers District Council v the Governor and Company of the Bank of England (no 5) [2003] QB 1556]
It is not a breach of LPP to discuss a matter with your nominated officer for the purposes of receiving advice on whether to make a disclosure.
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6.4.5 Crime/fraud exception
LPP protects advice you give to a client on avoiding committing a crime [Bullivant v Att-Gen of Victoria [1901]AC 196] or warning them that proposed actions could attract prosecution [Butler v Board of Trade [1971] Ch 680]. LPP does not extend to documents which themselves form part of a criminal or fraudulent act, or communications which take place in order to obtain advice with the intention of carrying out an offence [R v Cox & Railton (1884) 14 QBD 153]. It is irrelevant whether or not you are aware that you are being used for that purpose [Banque Keyser Ullman v Skandia [1986] 1 Lloyds Rep 336].
Intention of furthering a criminal purpose
It is not just your client's intention which is relevant for the purpose of ascertaining whether information was communicated for the furtherance of a criminal purpose. It is also sufficient that a third party intends the lawyer/client communication to be made with that purpose (eg where the innocent client is being used by a third party) [R v Central Criminal Court ex p Francis & Francis [1989] 1 AC 346].
Knowing a transaction constitutes an offence
If you know the transaction you're working on is a principal offence, you risk committing an offence yourself. In these circumstances, communications relating to such a transaction are not privileged and should be disclosed.
Suspecting a transaction constitutes an offence
If you merely suspect a transaction might constitute a money laundering offence, the position is more complex. If the suspicions are correct, communications with the client are not privileged. If the suspicions are unfounded, the communications should remain privileged and are therefore non-disclosable.
Prima facie evidence
If you suspect you are unwittingly being involved by your client in a fraud, the courts require prima facie evidence before LPP can be displaced [O'Rourke v Darbishire [1920] AC 581]. The sufficiency of that evidence depends on the circumstances: it is easier to infer a prima facie case where there is substantial material available to support an inference of fraud. While you may decide yourself if prima facie evidence exists, you may also ask the court for directions [Finers v Miro [1991] 1 W.L.R. 35].
The Crown Prosecution Service guidance for prosecutors indicates that if a solicitor forms a genuine, but mistaken, belief that the privileged circumstances exemption (see 6.5 below) applies (for example, the client misleads the solicitor and uses the advice received for a criminal purpose) the solicitor will be able to rely on the reasonable excuse defence. It is likely that a similar approach would be taken with respect to a genuine, but mistaken, belief that LPP applies.
We believe you should not make a disclosure unless you know of prima facie evidence that you are being used in the furtherance of a crime.
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6.5 Privileged circumstances
Quite separately from LPP, POCA recognises another type of communication, one which is received in 'privileged circumstances'. This is not the same as LPP, it is merely an exemption from certain provisions of POCA, although in many cases the communication will also be covered by LPP.
The privileged circumstances exemptions are found in the following places:
Although the wording is not exactly the same in all these sections, the essential elements of the exemption are:
- you are a professional legal adviser
- the information or material is communicated to you:
- by your client or their representative in connection with you giving legal advice
- by the client or their representative in connection with them seeking legal advice from you
- by any person for the purpose of/in connection with actual or contemplated legal proceedings
- the information or material cannot be communicated or given to you with a view to furthering a criminal purpose
The defence covers solicitors, their non-solicitor partners and their employees (see s330 (7B) of POCA). barristers and in-house lawyers.
Consider the crime/fraud exception when determining what constitutes the furthering of a criminal purpose.
Finally, section 330(9A) protects the privilege attaching to any disclosure made to a nominated officer for the purposes of obtaining advice about whether or not a disclosure should be made.
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6.6 Differences between privileged circumstances and LPP
6.6.1 Protection of advice
When advice is given or received in circumstances where litigation is neither contemplated nor reasonably in prospect, except in very limited circumstances communications between you and third parties will not be protected under the advice arm of LPP.
Privileged circumstances, however, exempt communications regarding information communicated by representatives of a client, where it is in connection with your giving legal advice to the client, or the client seeking legal advice from you. This may include communications with:
- a junior employee of a client (if it is reasonable in the circumstances to consider them to be a representative of the client)
- other professionals who are providing information to you on behalf of the client as part of the transaction
You should consider the facts of each case when deciding whether or not a person is a representative for the purposes of privileged circumstances.
6.6.2 Losing protection by dissemination
There may be circumstances in which a legal adviser has communicated to him information which is subject to legal professional privilege, but which does not fall within the definition of privileged circumstances.
For example, a lawyer representing client A may hold or have had communicated to him information which is privileged as between client B and his own lawyer, in circumstances where client A and client B are parties to a transaction, or have some other shared interest.
The sharing of this information may not result in client B's privilege being lost, if it is stipulated that privilege is not waived (Gotha City v Sotheby's (no1) [1998] 1 WLR 114).
However, privileged circumstances will not apply because the information was not communicated to client A's lawyer by a client of his in connection with the giving by him of legal advice to that client. However if it was given to him by any person in connection with legal proceedings or contemplated legal proceedings, privileged circumstances would apply.
In such circumstances, the lawyer representing client A would not be able to rely on privileged circumstances, but the information might still be subject to LPP, unless the crime/fraud exemption applied.
6.6.3 Vulnerability to seizure
It is important to correctly identify whether communications are protected by LPP or if they are merely covered by the privileged circumstances exemption. This is because the privileged circumstances exemption exempts you from certain POCA provisions. It does not provide any of the other LPP protections to those communications. Therefore a communication which is only covered by privileged circumstances, not LPP, will still remain vulnerable to seizure or production under a court order or other such notice from law enforcement.
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6.7 When do I disclose?
If the communication is covered by LPP and the crime/fraud exception does not apply, you cannot make a disclosure under POCA.
If the communication was received in privileged circumstances and the crime/fraud exception does not apply, you are exempt from the relevant provisions of POCA, which include making a disclosure to SOCA.
If neither of these situations applies, the communication will still be confidential. However, the material is disclosable under POCA and can be disclosed, whether as an authorised disclosure, or to avoid breaching section 330. Section 337 of POCA permits you to make such a disclosure and provides that you will not be in breach of your professional duty of confidentiality when you do so.
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