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From the President : Privilege is precious

Every Issue

Cite as: (2003) 77(10) LIJ, p.4

Legal professional privilege is under threat overseas and will soon face challenges in Australia

I have just returned from the American Bar Association Annual Conference in San Francisco. More than 10,000 lawyers 5000 guests and 200 foreign lawyers attended the conference. More than 2000 meetings were held over the four days of the conference.

The ABA House of Delegates met on the final two days of the conference. It is in effect the parliament of the ABA and consists of 540 members elected across America in a range of categories.

A major issue this year has been the concern by both American and European lawyers at the threat to legal professional privilege. It is an issue which we as lawyers will face in Australia within the next few years.

Enron and other financial scandals in the US have resulted in a wave of government legislation aimed at compelling lawyers to “dob in” those clients they believe are engaged in illegal activities.

The central legislation governing this issue in the United States is the Sarbanes Oxley Act 2002. This Act requires the US Securities and Exchange Commission (SEC) to establish rules governing the conduct of lawyers. These rules will significantly affect the lawyer/client relationship. The first draft of the SEC Rules required a lawyer to report illegal conduct “up the ladder”. As well the lawyer was required to effect a “noisy withdrawal” by reporting the conduct to the SEC and withdrawing from representing their client if the client failed to make an “appropriate response” to the SEC regulators.

After the SEC published the first draft of its Rules there was a huge public backlash. The SEC then modified the Rules making them less onerous. However they still have a drastic effect on the solicitor/client relationship in the United States. The SEC has currently put off a decision on whether or not to implement a rule regarding “a noisy withdrawal” for lawyers. The ABA has expressed its strong opposition to such a rule.

As lawyers we are all well aware of the importance of confidentiality in the solicitor/client relationship. Clients must feel they can disclose everything to their solicitor. This is essential if they are to obtain the best possible legal advice. Any attempt by the legislature to require lawyers to disclose client confidences, other than of course the existing ethical requirement to disclose imminent illegal conduct, should be viewed with great alarm.

Many European lawyers at the ABA conference argued that the profession has itself to blame for moves to remove or seriously weaken legal professional privilege. They pointed to the custom of law firms publishing tombstone advertisements in the press announcing the successful conclusion of deals on which they have advised. The names of their clients are proudly displayed and often the nature and size of the transaction is described. Whatever happened to solicitor/client confidentiality, they argue.

Law firms tendering for legal work are often required to disclose the names of their clients, the sorts of transactions in which they have been engaged and even what they have learned from undertaking those transactions. Many lawyers succumb to the pressure and reveal that information. It is hoped that the client’s consent would first be obtained.

Nevertheless, it creates an impression in the community that lawyers do not value highly the confidential nature of the solicitor/client relationship when it comes to self-promotion. If lawyers don’t value it, why should legislators? And why should lawyers sanctimoniously criticise them for doing so?

Perhaps what is required is a new set of ethical standards for the legal profession of the 21st century. We need only look at the ethical standards relating to advertising and publicity imposed on lawyers in jurisdictions such as Singapore and Hong Kong to see that we have dropped our guard by allowing lawyers to promote themselves in the media – often using their clients’ names. To my mind, it does not matter much if the client consents. As lawyers we should respect client confidences, notwithstanding that pressure might be on us to win a tender by disclosing our illustrious track record to a potential client.

Enron and its fallout have seen a resurgent focus on ethics in different professions, especially among lawyers. This is all for the good, however we must walk the talk as well. Legal professional privilege is a precious right, belonging to our clients. They have enjoyed this right for centuries. The political push to erode it now underway overseas is yet to be replicated in Australia. We should ensure that nothing we do in the conduct of our respective legal practices could cause it to come under threat.

Bill O’Shea


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