Introduction

In both the United Kingdom and Australia, a professional grudge match is beginning to emerge which has the potential to become as divisive as a Manchester United v Liverpool football match. Should accountants be able to claim privilege just like lawyers?

Although this debate was recently considered by the United Kingdom Supreme Court (whose judgment is in the video below), it appears that despite some good arguments in attack and some good counter-arguments in defence, accountants are unable to convince lawyers that privilege should be extended to them.

The warm up: what is privilege?

Before exploring the arguments for and against giving accountants the ability to claim privilege, it’s important to warm up by first considering the concept of privilege.

Known legally as client legal privilege,[1] and informally as legal professional privilege, “privilege” is the protection given to communications made either by a client or by a lawyer within the context of their professional relationship. As a result of this protection, the lawyer must keep all communications, written and oral, strictly confidential – including from the eyes of a court.

What’s most interesting about the law relating to privilege is that it already extends to other professions. Journalists are included so that they can claim privilege when they’re asked to reveal their sources, and religious clergy are included so that they can claim privilege in relation to confessions of a non-criminal nature.

So now that the law itself has been considered – let the game begin!

Accountants’ shot #1: privilege already extends beyond lawyers

The first shot for goal comes from accountants who argue that, since the law currently extends privilege to non-legal professions, it can easily be further extended to include accountants.

The lawyers’ defence to this argument is that these extensions are selective and occur only when it’s in the public’s best interests. The public doesn’t have an interest in protecting the work of accountants to the same extent that the sources of journalists or the confessions for clergy should be protected.

So after round 1 the score is: Lawyers 1, Accountants 0.

The game of the season: the UK Supreme Court

On 23 January 2013, the United Kingdom Supreme Court considered the issue of accountants’ privilege as part of its judgment in R v Special Commissioner of Income Tax.[2] This judgment was posted on YouTube[3] - take a look.

Click here to watch video.

The case concerned advice provided by PricewaterhouseCoopers to Prudential (Gibraltar) Ltd and Prudential plc. The Court had to decide whether a claim of privilege could prevent the Inspector of Taxes from viewing the advice which had been provided.

Lawyers’ shot #1: clarity

The UK Supreme Court thought that if it were to extend privilege to accountants this would lead to a situation where the law on privilege would become unclear. This is because a court would find itself in a predicament where it couldn’t clearly state to which professions it was extending the right to claim privilege, and which professions were still not being given that right.

Accountants did however suggest that the law is antiquated and that it’s no longer practical to restrict privilege solely to lawyers. Further, from a practical perspective, if the law listed the professions to which privilege was to be extended, similarly to how it currently extends to journalists and clergy, then this list would resolve any issues of clarity.

Accountants start to mount a comeback: Lawyers 1, Accountants 1.

Lawyers’ shot #2: an issue for the UK Parliament

Secondly, the UK Supreme Court also rejected the idea of extending privilege to accountants by holding that it should be a matter for Parliament rather than the courts to extend privilege. Essentially, the Court was of the view that since Parliament had previously legislated in respect to the law on privilege, it should be Parliament who changes the law.

Given however that this is more an argument of how the law should change rather than the merits of an accountant’s privilege, we’ll call this shot off-side.

Thus the score remains the same: Lawyers 1, Accountants 1.

Accountants’ shot #2: the relationship between accountants and their clients

Moving away from the UK Supreme Court case, another argument which is often made by accountants is that because the relationship between accountants and clients is characterised by a strong level of confidentiality, just like the relationship between lawyers and their clients, it’s appropriate to extend privilege. The Australian Law Reform Commission has also commented on this argument and has recognised that there may be some cases where, due to issues of confidentiality, it is appropriate to extend privilege.[4]

Lawyers would argue that the confidentiality requirements which exist in law are different to those requirements which exist in accountancy; since accountants are nonetheless required to maintain a strong level of confidentiality, this argument would probably survive criticism.

The shot scrapes by the keeper: Lawyers 1, Accountants 2.

Accountants’ shot #3: the nature of the accountancy profession

Like lawyers, accountants are highly qualified. As such, the third argument by accountants is that because the work they produce carries a high level of expertise and professionalism, it should be protected by privilege just like the work of lawyers.

This argument, however, is likely to fail because it mischaracterises the nature of privilege. The idea behind privilege isn’t to protect the work itself but to protect clients by ensuring that any communications which could compromise their position is kept confidential. Therefore because the work of accountants, whilst specialised and professional, in many instances doesn’t expose clients to significant legal risk, this argument doesn’t properly support extending privilege.

Lawyers are back in the game: Lawyers 2, Accountants 2.

The shot in injury time: the nature of the advice

The final argument from accountants is that in some cases the work of accountants has a legal element to it and thus it should also be protected by legal privilege. Such advice usually relates to taxation or superannuation laws and offers a practical interpretation of how clients can use these laws to their advantage.

This is argument is an easy goal for lawyers, as only lawyers can give legal advice. Under the Legal Profession Act 2004 (NSW) it would actually be illegal for accountants to offer legal advice unless they’re also entitled to practice as a legal practitioner.

Conclusion

Although there are strong arguments for extending privilege to accountants, lawyers are able to defend these arguments quite successfully.

As such when the final whistle is blown it appears that, although accountants have some strong arguments, accountants are still unable to convince lawyers that privilege should be extended.

Final score: Lawyers 3, Accountants 2.

At this point accountants must be thinking that the match was fixed given it was written by lawyers! The referees are however also divided on the issue, with Steven Canton sticking with the lawyers and Chris Kintis barracking to give accountants the right to claim privilege!