A significant judgment for law firms was handed down on 21/9/26. The High Court has ruled that the SRA does not have the right to require firms to produce legally privileged documents without a waiver from the client.
The case concerned the SRA’s use of its powers under section 44B of the Solicitors Act 1974 (1974 Act) to obtain privileged material during regulatory investigations. Mr Justice Butcher concluded that the legislation was not sufficiently clear to override the fundamental right of legal professional privilege (LPP) and could find no clear parliamentary intention to override it. He concluded that it will ultimately be a matter for Parliament to decide whether the SRA ought to have such powers, noting however, that most SRA investigations would still be able to proceed without privileged material and/ or ‘when it is the client who complains to the SRA about his own solicitor, there is clearly a strong case to be made that, even if there is no express waiver, there is an implied waiver’ of LPP.
This is an important decision for the profession and potentially has significant implications for the way SRA investigations are conducted and what happens to those cases where privileged information has already been disclosed to the SRA. However, this is unlikely to be the end of the matter as the High Court has given the SRA permission to appeal as well as a ‘leapfrog certificate’ meaning that the Supreme Court (rather than the Court of Appeal) can hear the permission to appeal application and decide whether it will hear the appeal or whether it should follow the usual course with an appeal heard by the Court of Appeal. Depending on the outcome of the appeal, there is also likely to be pressure, from anti-SLAPP campaigners amongst others, on parliament to change the law and provide the SRA with greater powers in this arena amid fears that the SRA will be ‘toothless’ without them. However, there are calls the other way to continue to treat LPP as a fundamental right and not make exceptions to it, seeing such erosion as a ‘dangerous and slippery slope’ where others (such as a populist government, for example) might also seek to escape the impact of LPP for their own purposes. It will be fascinating to watch this story further unfold.
How did the case arise?
The case arose from an SRA investigation into Carter-Ruck solicitors concerning their conduct when acting for a client (Mr Amersi) in what the SRA suspected might be SLAPP case (Strategic Litigation Against Public Participation). The SRA issued notices under section 44B of the 1974 Act requiring the firm to produce documents from its client’s files, including privileged material, claiming it had the necessary powers to compel such disclosure even without the client’s consent (which he did not provide). The firm sought a court declaration that s44B did not give the SRA the power to require material subject to LPP to be produced.
In addition to the SRA’s argument that s44B allowed them to override LPP, they argued in the alternative that the provision of privileged material to the SRA was not an infringement, or was a permissible infringement of LPP. The Judge rejected this argument concluding that legal regulators are in no different position to other regulators (such as the FCA, which does not have such powers).
What now?
For the time being, here are our thoughts on what firms need to be aware of:
- Giving privileged material to the SRA (or any other legal regulator) will infringe LPP, so serious thought will have to be given to this issue every time the SRA serves a s44B notice, with privileged material being identified, and instructions taken from the client on waiver (or otherwise). Firms can no longer take the arguably ‘easier’ option of acceding to the SRA’s demands, explaining to the client that they have no choice. As always, document your thought process carefully.
- Firms may wish to disclose privileged material to assist their own defence against the SRA/ justify their advice or conduct, but without the client’s consent this will not be possible. This could cause big problems for firms and solicitors. If such consent is given by your client, document this carefully, but consider very carefully whether it is ever in the best interests of your client to waive privilege and therefore whether asking them to do so is proper.
- Where privileged material has already been provided to the SRA in response to a s44B notice, consider whether you should insist upon this being returned or destroyed and/ or whether previous SRA/ SDT decisions should be challenged on the basis that the evidence relied on was obtained by the SRA outside its statutory powers.
- Section 44B notices are not the only way the SRA can seek information from solicitors so ensure you really are dealing with such a notice before refusing to provide privileged information (for example, privileged information can be provided in an intervention situation).
- Any s44B notices (or any requests from the SRA) should be passed to the COLP immediately and treated very seriously.
- Consider whether any communications fall outside LPP because they were made for the purpose of further a crime or fraud (the Iniquity Exception).
- If the SRA carries out any file reviews as part of their proactive AML supervision on-site visits or desk-based reviews, be careful to remove/ redact privileged information.