By Alex Potts
In its first major judgment of 2013, R (on the application of Prudential plc and another) v Special Commissioner of Income Tax and another  UKSC 1, the United Kingdom Supreme Court has confirmed the common law principle that legal professional privilege only applies to communications passing between a client and its lawyers in connection with the provision of legal advice.
As a matter of English law, privilege does not apply to communications between a client and other professional service providers, such as accountants or consultants, even if their advice is legal or quasi-legal in nature (as tax, corporate, restructuring, regulatory and compliance advice often is).
The case arose out of a U.K. tax avoidance scheme devised by PricewaterhouseCoopers (‘PwC’) for the Prudential group in 2004. The U.K. tax authorities investigated the scheme, and served document requests on Prudential. Prudential refused to give disclosure of certain sensitive documents, claiming that legal professional privilege attached to communications between Prudential and PwC relating to the tax advice given by PwC, and it sought to challenge the tax authorities’ request by way of judicial review.
The English High Court and the Court of Appeal both rejected Prudential’s claim to legal professional privilege. Prudential appealed to the Supreme Court (supported by the U.K. accountancy profession), the appeal being heard by a panel of seven Supreme Court judges. By a majority of five to two (Lord Sumption notably dissenting), the Supreme Court dismissed Prudential’s appeal, and confirmed that legal professional privilege should not be extended to non-lawyers (unless Parliament enacts primary legislation to that effect).
This judgment is likely to be followed in other jurisdictions that follow English common law, such as Bermuda. Indeed, Bermuda courts have confirmed that legal professional privilege is a fundamental right, protected both at common law and by Bermuda’s constitution, which can only be specifically overridden by statute, or by the client waiving its privilege (IRS & Minister of Finance v Braswell  Bda LR 41,  Bda LR 51; R v Hoskins  Bda LR 25; and Fidelity Advisor Series VIII v APP China Group Ltd  Bda LR 70).
U.S. and international businesses should continue to ensure that they take advice from properly qualified lawyers on both English law and Bermuda law matters, if they want to keep their legal, tax, and regulatory advice privileged from inspection.
The full judgment and a summary can be found here.