SRA to issue guidance on ‘without prejudice’ pre-action letters

The Solicitors Regulatory Authority plans to issue guidance about the practice of labelling pre-action letters as ‘private and confidential’ or ‘without prejudice’ after a former magic circle tax partner received an ‘intimidating’ letter from lawyers acting on behalf of chancellor Nadhim Zahawi.

Dan Neidle, previously Clifford Chance’s head of tax in London, raised concerns last month about the ‘common tactic’ of solicitors stating that a letter before claim is confidential and threatening ‘serious consequences’ if it is published or even its existence is disclosed, which he said is ‘improper’.

He wrote to the SRA after City firm Osborne Clarke contacted him in response to blog posts questioning whether Zahawi had avoided tax through an offshore family trust. Zahawi denies any such suggestion.

Osborne Clarke sent Neidle a letter marked ‘confidential and without prejudice’ followed by a second labelled ‘not for publication’ – but Neidle published both letters and called on the regulator to update its guidance on SLAPPs, strategic litigation against public participation.

He also asked the SRA to warn firms about ‘assertions of confidentiality or “without prejudice” which do not have a firm legal basis’, in a letter sent to SRA chief executive Paul Philip.

Neidle – the founder of Tax Policy Associates, set up ‘to improve the tax system and the public understanding of tax’ – this week published the response from the SRA’s general counsel Juliet Oliver, which he praised as ‘excellent’.

In the letter, Oliver revealed that the regulator is ‘currently developing further specific guidance to the profession on the topic of SLAPPs, highlighting the issues arising from our casework’. She added: ‘We plan (amongst other things) specifically to address the practice of labelling correspondence as “private and confidential” and/or “without prejudice” and to address the conditions under which doing so may be a breach of our requirements.’

Oliver said the SRA will also ‘carry out a thematic review of a targeted sample of firms, looking at the steps taken by firms to address the issues raised in our conduct in disputes guidance.’

Neidle wrote on his blog: ‘It may come as a surprise to many people, but solicitors are not allowed to tell fibs. The Solicitors Regulatory Authority requires solicitors to act with the SRA principles: to act with honesty, integrity, independence, and to uphold the rule of law. Intimidating people into not publishing letters they are perfectly entitled to publish is the very opposite of these principles.’

He added: ‘Silence is integral to the SLAPP strategy. A small-time blogger says something you don’t like. You get your lawyers to write them a letter warning them off. The blogger deletes their blog, and nobody has any idea what happened. The SRA now has a fantastic opportunity to end this and to force libel lawyers and their clients to step into the light. If you want to threaten someone with libel: fine. But you’ll have to face the consequences of everyone knowing what you’re up to.’