Law Society goes to war on accountants’ privilege

Lobbying battle goes to heart of government as Chancery Lane hires Kentridge to stop the accountants

The legal profession is fighting a desperate rearguard action against accountants’ attempts to claim legal privilege to limit their duty to report client information under anti-money laundering legislation.

The Law Society has instructed Brick Court Chambers heavyweight Sir Sydney Kentridge QC to prepare counsel’s opinion for presentation to the Home Office as part of its response to the consultation process.

A society spokesperson claimed Kentridge had not been instructed, but several sources close to the society confirmed he will provide an opinion on money laundering as part of wider advice on privilege and tax avoidance.

The Kentridge opinion mirrors a tactic used by the accountants’ professional body, the Institute of Chartered Accountants (ICA).

The ICA sought an opinion from Kentridge’s Brick Court colleague David Anderson QC in January.

The ICA passed the opinion to the UK Government several weeks later as part of a plan to persuade the Home Office to extend legal privilege to accountants.
The Home Office subsequently launched the current consultation, which ends on 30 September. A spokesperson for the department said: “The consultation wasn’t prompted by representations from one organisation.”

It is understood that Anderson’s confidential opinion made three key arguments for extending privilege relating to the UK’s EU law obligations. These issues form the backbone of the Home Office consultation paper, leading some lawyers to complain of unfair influence by the accountancy firms.

The consultation is being rushed through with what one source called “unseemly haste” in eight weeks rather than the usual sixteen. The Home Office spokesperson said there was no set timetable for consultations.

Some lawyers argue that, if the exemption is extended, it could frustrate the original purpose of the Money Laundering Regulations 2003.

DLA partner Jonathan Pickworth said: “The money laundering exception does not give blanket immunity. Privilege is narrow and only really applies to criminal issues. A commercial lawyer shouldn’t be advising, let alone an accountant.”