The High Court has confirmed that the Solicitors Regulation Authority (SRA) cannot use its statutory investigatory powers to compel a firm to disclose documents or information protected by its clients’ legal professional privilege (LPP).
In Carter-Ruck Solicitors v Solicitors Regulation Authority, the Court considered the scope of the SRA’s powers under section 44B of the Solicitors Act 1974 and, in particular, whether those powers extend to material over which a firm’s clients are entitled to assert privilege.
The decision provides an important restatement of the status of LPP as a fundamental legal right – and of the limits of a regulator’s investigatory powers where Parliament has not expressly authorised interference with that right.
The issue
Section 44B gives the SRA wide powers to require a solicitor or firm to provide information and documents in connection with an investigation.
The question for the Court was whether those powers were sufficiently broad to require Carter-Ruck to disclose material which was subject to its clients’ LPP.
The distinction is important because privilege belongs to the client, not the solicitor.
A solicitor cannot therefore waive a client’s privilege simply because disclosure would assist the firm in responding to a regulatory investigation. Where a properly arguable claim to privilege exists, the solicitor is required to assert it on the client’s behalf.
The Court’s approach
The High Court concluded that section 44B does not give the SRA the power to compel disclosure of information or documents protected by a client’s LPP.
Central to the decision was the established principle that general statutory language will not ordinarily be interpreted as overriding a fundamental right.
If Parliament intends legislation to interfere with LPP, it must do so through express wording or by necessary implication. The general language used in section 44B did not meet that threshold.
That remains the position even though disclosure is sought by a professional regulator rather than an opposing party in litigation.
Disclosure of privileged material to the SRA is still an infringement of privilege unless the client has waived it or Parliament has authorised the disclosure.
A client’s refusal to waive privilege is not enough
The judgment also addresses an important practical issue for firms subject to regulatory investigation.
A client is entitled to refuse to waive privilege. That decision cannot, without more, be challenged simply because it makes the SRA’s investigation more difficult.
Nor can the fact that a regulator may put safeguards around its subsequent use of documents create a power to obtain them in the first place.
In other words, measures governing what the SRA might do with privileged documents once disclosed cannot overcome the absence of a statutory power compelling their disclosure.
The iniquity exception remains
The decision does not mean that every communication between solicitor and client will necessarily be protected.
LPP does not attach to communications falling within the established iniquity exception – broadly, where the solicitor-client relationship is being used to further crime, fraud or equivalent misconduct.
Where that exception is properly engaged, the communication is not protected by privilege in the first place.
But that is distinct from allowing the regulator to override otherwise valid LPP simply because access to the material would assist its investigation.
Why the decision matters
The judgment draws a clear line between the SRA’s legitimate regulatory functions and the protection afforded to privileged communications.
For solicitors facing an SRA investigation, it also reinforces a potentially difficult but important point: the privilege is the client’s to assert or waive, not the firm’s.
A firm cannot surrender that privilege for its own convenience. Equally, where a claim to privilege is properly arguable, the fact that asserting it may frustrate or complicate an investigation does not remove the obligation to protect the client’s position.
The Court’s approach is also significant beyond the immediate facts of the case. Statutory investigatory powers may be broad, but fundamental rights are not displaced by broad or general wording.
If the SRA is to have wider powers to obtain material protected by LPP, that is ultimately a matter for Parliament, rather than something which can be achieved by extending the interpretation of section 44B.
Key takeaways
- Legal professional privilege belongs to the client, not the solicitor.
- The SRA’s powers under section 44B of the Solicitors Act 1974 do not permit it to compel disclosure of material protected by a client’s LPP.
- A solicitor must assert a properly arguable claim to privilege on behalf of the client.
- A client’s refusal to waive privilege does not cease to be effective simply because it obstructs or complicates a regulatory investigation.
- Safeguards governing the SRA’s subsequent use of material cannot create a statutory power to obtain privileged documents.
- Communications falling within the iniquity exception are not protected by LPP.
- Any broader statutory power allowing the SRA to override LPP would be a matter for Parliament.
Carter-Ruck Solicitors v Solicitors Regulation Authority is therefore an important reminder that regulatory powers, however important their purpose, operate within established legal limits – and that legal professional privilege remains a fundamental protection which cannot be overridden by general statutory language.
