Editor’s foreword

The Department for Constitutional Affairs is, it appears, now set to allow non-lawyers to not only administer the deceased’s estates but also to obtain grant of probate.

Currently, solicitors, barristers and notaries public can apply for grants of representation but nobody else can do so for “reward”. Few clients are probably aware that there are probate services available other than from solicitors and banks. But, unfortunately, as the BBC’s “Inside the Money” programme (Radio 4) showed recently, they do exist and they may well be neither regulated nor insured. This places client funds at risk of loss.

I have never heard complaints from ECA readers that they object to competition, but in the present case, it is clear that if the proposals are implemented, the clients of these new miscellaneous organisations seeking to obtain grants of probate and administer estates will have either limited or no protection. Is this supposed to be a process of creative destruction?

Solicitors carry huge insurance for which they must pay a large price, as well as more usual business overheads, which are, in part, geared to help them meet their strict client-care obligations under the Law Society’s Rules of Conduct. It is bizarre that solicitors are considered so dreadful that unregulated individuals and bodies should be allowed to provide those services as an “alternative”. It is a highly questionable alternative at best.

It is understood that the statutory instrument involved is expected to contain certain consumer safeguards, but it is doubtful that there is any legal support for the addition of those safeguards. As the Law Society Gazette on 23 September 2004 rightly pointed out, it is likely that any such safeguards will be subjected to legal challenge.

In short, while competition is a good thing both for the profession and the client, the current status, at the time of writing this editorial, is that an unequal playing field is likely to be introduced. That cannot be acceptable.

In respect of the new “tax scheme” disclosure rules, reported in detail in the last edition of ECA, the paymaster general recently told the Institute of Chartered Accountants tax faculty that the Inland Revenue felt that there was nothing in the disclosure regime that stops lawyers from following the rules. That is “in the same way as accountants and other advisers”. It is clear that the paymaster general considers that the government will consider amending the rules if privilege prevails.

A Law Society Guidance Note has been issued on the Law Society website, www.lawsociety.org.uk. The essence of it is that “the Law Society’s view is that in many cases this information [that is, the information required by the Inland Revenue] would be subject to legal professional privilege”, that is a result of privilege attaching to communications passing between the solicitor and the client for the purposes of the client obtaining legal advice.

Section 314 of the Finance Act 2004 makes it clear that nothing in Part 7 applies to the disclosure of privilege information. It should be noted that the privilege is really the privilege of the client not the privilege of the solicitor involved.

In the meantime, solicitors have to consider whether or not the information required for disclosure “formed part of the substance of confidential communications that have passed between them and their clients for the purposes of obtaining and giving legal advice”. If it did, then the exemption in section 314 will apply. The Law Society Guidance adds: “In such cases, the privilege information will not be disclosed unless a solicitor is aware that the client has waived the privilege. The position is not altered by the fact that a solicitor may give similar advice to several clients.”

The editor considers that both the probate situation and the tax-disclosure situation are the result of fundamentally misconceived ideas about professional services.

Efficiencies within a market can be improved without compromising client care/client protection and legal privilege is not something that should be lightly tampered with. That is especially when the tax-disclosure rules themselves are so opaque.

I wonder why the large numbers of lawyers within government ranks are not clamouring for urgent changes. Perhaps they really are as utterly divorced from the practical reality of their colleagues “out here” as I have always hitherto merely feared? But then, they have a very nice, safe pension fund, just massively topped up by the poor old taxpayer. So maybe the professions can all go to pot and they wouldn’t notice. Memo: must get into politics. Now that’s a privilege worth having.

David Coldrick
Editor

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