VI. Solicitors and Confidentiality

Solicitors’ duty of confidentiality closely follows the common law. Any duty imposed by rules of conduct must be at least as rigorous, or onerous, as the rights recognised by the legal duty of confidence and by the privilege attaching to legal advice and litigation.

A. A Brief History of Regulating Confidentiality

i. Solicitors’ Practice Rules 1990

The Solicitors’ Practice Rules 1990 made no mention of confidentiality in either the Basic Principles or the rules. By 1999, the eighth edition of the Guide devoted a chapter to confidentiality with seven principles and several pages of guidance. The main principle was that ‘[a] solicitor is under a duty to keep confidential to his or her firm the affairs of clients and to ensure that the staff do the same’.¹⁰⁷

¹⁰⁴ Ablitt v Mills & Reeve (a firm) (1995) The Times 25 October 1995.

¹⁰⁵ Al Fayed v Metropolitan Police Commissioner [2002] EWCA Civ 780.

¹⁰⁶ R v Bowden [1999] 4 All ER 43.

¹⁰⁷ N Taylor (ed), The Guide to the Professional Conduct of Solicitors, 8th edn (1999) Principle 16.01.

ii. The impact of Bolkiah

The implication of the decision in Bolkiah, that a potential conflict of interest between past and present clients could not be avoided by erecting information barriers, caused considerable concern. Acting for past and present clients with interests in the same subject matter was, at the time, treated as a conflict of interest. The relevant principle in the Guide to the Professional Conduct of Solicitors 1999 stated that ‘a solicitor or a firm of solicitors should not accept instructions to act for two or more clients where there is a conflict or a significant risk of conflict between interests of those clients’.^[1632] This was buttressed by an explicit prohibition stating that ‘if a solicitor or firm of solicitors has acquired relevant confidential information about an existing or former client during the course of acting for that client, the solicitor or the firm must not accept instructions to act against the client’.^[1633]

The House of Lords decision in Bolkiah was perfectly consistent with the Code of Conduct, but not with what was happening ‘on the ground’.

The position was particularly worrying for large City law firms. They argued that conflicts should be ‘managed’, not prohibited. They claimed that the Law Society principles were unclear and unenforceable.^[1635] The City firms were not always as suc­cessful at ‘managing’ conflict as they claimed.^[1636] Nevertheless, it was said that top firms might resist the rules in order to keep business.^[1637] They proposed relaxation of the rules. This provoked opposition, especially from smaller firms. They consid­ered that big firms were attempting to establish an effective monopoly over lucrative business such as corporate takeovers and licensing.

iii. The City of London Law Society Working Party

on Conflict of Interest Rules

The publicity and attention given to the Bolkiah case meant it was unsafe for solici­tors to carry on as they had before. The decision raised the issue of whether past client conflicts could be successfully managed and began a search for how. Different solutions were canvassed, including the possibility of exempting certain transactions from conflict rules.^[1638] Partly as a result of Bolkiah, the Law Society invited the City of London Law Society to establish a working party on conflict of interest rules (hereafter ‘the working party’).

According to Chris Perrin, who chaired the working party, two factors drove the post-Bolkiah re-examination of past and present client conflict rules.^[1639] One was the practice of many corporate clients of instructing different large firms on different matters.

The second factor was the growth of the overseas market. Lawyers working overseas encountered less restrictive conflict regimes in other countries, even in the EU. Lawyers in other countries could generally act against past clients provided the present matter was not related to the previous work. English solicitors therefore felt at a disadvantage because their domestic conduct regime required them to refuse instructions that over­seas competitors could accept in the same circumstances.

Under pressure from the large firms the Law Society established the working party. This announced shortly after that Lord Millett’s judgment was unclear, that on vital issues it was only obiter dicta and, if it was the law, it should be changed.^[1640] A fur­ther argument for change was the pan-European Council of Bar and Law Societies of Europe (CCBE) ethics code. These rules provided that conflicts were restricted to present matters. Under Practice Rule 15 this CCBE code governed the cross-border activities of English lawyers. Further, the European professions were committed towards working towards harmonisation of domestic ethics regimes around the CCBE code.^[1641]

iv. Proposed Rules for Dealing with Past and Present Client Situations

In 2000, the working party published a proposal that solicitors only be prevented from acting where past or present clients had an interest in the same or related matters. This had implications for the Bolkiah judgment. If Lord Millett’s ruling applied to lawyers acting against former clients, as some academics argued,^[1642] any change to the position would have to be enacted as subordinate legislation.^[1643] Six weeks before the approval of new rules by the Law Society Council, Marks & Spencerplc v Freshfields Bruckhaus Deringer was decided.

According to Perrin, the revised rules sought to be stricter than the emergent common law standard in two respects. First, the Law Society wanted solicitors to be obliged to disclose to a client any information relevant to a present matter, not just that from a relevant previous retainer. Second, a firm should not be able to try and manage a potential past and present client conflict merely by erecting informa­tion barriers. The Law Society considered it proper that the past client be informed beforehand so that they could challenge the arrangements proposed for protecting their confidentiality.^[1644]

V. The Solicitors’ Practice (Confidentiality and Disclosure)

Amendment Rule 2004

In addition to amending the rules on conflict of interest the working party also proposed amending the Solicitors’ Practice Rules 1990 by adding a new sub-section, 16E, on confidentiality and disclosure.^[1645] The rules emphasised the pre-eminence of the duty of confidentiality, but also stated that ‘[y]ou must disclose all information relevant to your client’s matter of which you are aware which is material to that client’s matter regardless of the source of the information’.

This lawyer’s duty to disclose was qualified by the rider ‘unless there is a duty of confidentiality... which always over-rides the duty to disclose’. The duty to disclose was also qualified by three exceptions. The first exception was circumstances where disclosure is prohibited by law. The second was where it is agreed expressly with the client that no duty to disclose arises or a different standard of disclosure applies. The third was ‘where there is a serious belief that serious physical or mental injury will be caused to any person if information is disclosed to a client’.^[1646]

The rules went on to impose a duty not to risk breach of confidentiality to a previ­ous client. The solicitor would have to consider whether acting for another client would involve use of information that might reasonably be expected to be material where that client has an interest adverse to the former client.

Preservation of a right to continue acting without a past client’s consent was justi­fied by an example. If a firm is already acting for a new client and then discovers that it holds relevant confidential information about a former or existing client, then it may be possible to continue so to act even where the latter client does not consent to this. For example it may not be possible to obtain informed consent from the client whose confidential information needs protection. Indeed, to ask for such consent might in itself be a breach of the confidentiality of the new client. Equally, it may be an acceptable reason that the existing client is incapacitated and unable to consent. Neither the Rule nor the guidance mentions this possibility.

In circumstances where solicitors discovered that they held information on a former client relevant to a present matter, Rule 4.05 allowed a firm to continue acting. In order to do so, the new client had to understand and agree that the firm held infor­mation it could not disclose. Additionally, all safeguards required by law had to be in place. On whether it would be reasonable to so act, the guidance warned that only sophisticated clients, such as corporate bodies with in-house legal advisers, would be able to give informed consent.^[1650]

As a result of the 2004 rule amendment the problem of past and present client conflicts of interest was re-formulated as a problem of confidentiality.

vi. The Solicitors’ Code of Conduct 2007

The Solicitors’ Code of Conduct 2007 continued the passage to the current outcomes on confidentiality. The Code incorporated the working party’s rules on confidentiality in full. Additionally, in 2010, the SRA, under pressure from the City of London Law Society,^[1651] added a note to Rule 4, which dealt with confidentiality. This noted that the issue of past clients’ information had previously been dealt with as a conflict of interests issue. It added that ‘[t]he rule does recognise that confidential information can be protected by the use of information barriers with the consent of the client and, in very limited circumstances, without that consent’.

The duty of confidentiality in the code was to ‘keep the affairs of clients and former clients confidential except where disclosure is required or permitted by law or by your client’.^[1652] This protected existing clients, previous clients and deceased clients. It also covered prospective clients, for example, those interviewed but not acted for. It cov­ered all information about clients, whether acquired by acting for them or from some other source.^[1653]

B. Confidentiality in the SRA Handbook and Code of Conduct

i. Principles, Outcomes and Indicative Behaviours

None of the principles of the SRA Code of Conduct 2011 deal explicitly with confidentiality. The obligation may however be implicit in the duty to act in the best interests of each client and to act with integrity. It is also important to consider the implications of the first principle, requiring that solicitors uphold the administration of justice. This is presumably the basis on which lawyers could break the duty of confidence to clients in order to comply with orders of the court.

There are five outcomes concerned with client confidentiality. These reflect the Law Society Working Party amendment to the Solicitors’ Practice Rules 1990. The first and overarching outcome is that ‘you keep the affairs of clients confidential unless disclosure is required, or permitted, by law or the client consents’.^[1654]

a. Affairs of Clients

The duty of confidentiality is extensive. It applies to all matters communicated in confidence by the client to the lawyer. It also covers all other information relating to the representation that the lawyer acquires, regardless of the source. In theory, con­fidentiality lasts throughout the representation and beyond. It endures even after the death of the client. The information can only be used to advance the client’s interests and cannot be used to the detriment of the client.

b. Disclosure to Client of Pre-existing Knowledge of the Client and Matter

The second outcome on confidentiality is not about protecting the secrecy of what clients tell lawyers. Rather, it is about what lawyers must tell clients. Therefore, the outcome is that ‘any individual who is advising a client makes that client aware of all information material to that retainer of which the individual has personal knowledge’.^[1655] Nor is the third outcome about confidentiality as such. Rather it states that ‘you ensure that where your duty of confidentiality to one client comes into conflict with your duty of disclosure to another client, your duty of confidentiality takes precedence’.^[1656]

c. Disclosure Required or Permitted by Law

Exceptions to lawyer client privilege can also arise when there is an overriding public policy. Most jurisdictions permit and may require disclosure to prevent death or substantial bodily injury. Lawyers are often able to disclose information in order to prevent or rectify the consequences of a crime or fraud that injures the financial or property interests of another. The Law Society’s 1999 Guide advised that where the solicitor is being ‘used by the client to facilitate the commission of a crime or fraud’ the solicitor is not bound by confidentiality.^[1657] This accords with the scope of privilege defined by PACE.

An unusual dilemma arises where a lawyer believes it is unethical to comply with a court order. The lawyer may be asked to produce client information or to testify regarding client communications. The lawyer may believe that they owe a superior ethical duty to maintain the confidence and even be prepared to risk prison to protect it. This would doubtless be considered antithetical to upholding the rule of law and proper administration of justice.

d. Client Consent to Disclosure

Confidentiality ‘belongs’ to the client and not the lawyer; only the client can waive it, either expressly or, sometimes, impliedly. For example, privilege can be inadver­tently waived at trial by, for example, a failure to object to prevent testimony about the privileged communications. Under normal circumstances, clients must give informed consent to revealing confidential information or information protected by the privilege.

e. Exception to Requirements

The SRA Handbook countenances circumstances in which a solicitor could act for two clients whose interests are adverse, where confidential information is held on one of them and that client does not consent. This most likely situation to arise is where a prospective client (A) asks a solicitor to act in a matter and the solicitor realises that he holds information on a past client (B) that is relevant to A’s matter.

In the circumstances of past client conflict, the obligation of disclosure to A is subordinate to the duty of confidentiality to B (see (b) above). Outcome 4.4 does not, however, operate to preclude a solicitor acting when the duties of confidentiality and disclosure conflict. It provides as follows:

[Y]ou do not act for A in a matter where A has an interest adverse to B, and B is a client for whom you hold confidential information which is material to A in that matter, unless the confidential information can be protected by the use of safeguards, and:

(a) you reasonably believe that A is aware of, and understands, the relevant issues and gives informed consent [and];

(b) either:

(i) B gives informed consent and you agree with B the safeguards to protect B’s informa­tion; or

(ii) where this is not possible, you put in place effective safeguards including information barriers which comply with the common law; and

it is reasonable in all the circumstances to act for A with such safeguards in place.

The outcome requires that the prospective client, A, gives informed consent. It also requires that the past client, B, does so. If B fails to consent to their former solicitor acting for A, this does not prevent the solicitor acting. In order to act, however, there must be adequate safeguards to protect B’s information and it must be reasonable in all the circumstances to act. This is a rule of some complexity and it is considered first in the next section on the general context of exceptions.

VII.