This publication examines the application of solicitor-client privilege to communications that involve lawyers, accountants, and clients working together in the context of tax planning. It analyzes the legal framework governing when privilege attaches to these three-party communications and when it does not, with practical guidance for structuring advisory relationships to preserve privilege where possible.
Solicitor-client privilege protects communications between a client and their lawyer made for the purpose of obtaining legal advice, but does not automatically extend to communications involving an accountant unless the accountant is acting as an agent of the client in seeking that legal advice.
The “dominant purpose” test remains the standard for determining whether communications in a collaborative advisory setting are privileged. Communications that are primarily for accounting or tax compliance purposes will not attract privilege even if a lawyer is copied on the correspondence.
Tax advisors and accountants can help preserve privilege by structuring their engagement so that communications flowing through legal counsel are clearly directed toward obtaining legal advice, and by maintaining separate documentation for privileged and non-privileged work.
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