Oct 31, 2023
Recent new federal mandatory disclosure rules risk compromising solicitor-client privilege, says Jack Silverson in an interview with The Canadian Bar Association National Magazine.
The new rules, which took effect on June 22, substantially expand the number of business transactions that must be reported to the CRA. Taxpayers, promoters and certain advisers – including legal professionals – are required to report these transactions. Solicitor-client privilege ensures clients can discuss their options with counsel freely and without fear. Without that assurance, clients might be inclined to hold back information.
“The system depends on clients telling their lawyers everything, being open and forthright,” says Jack. “Lawyers can’t represent their clients fairly without all the facts.
“Typically, the client gets their lawyer’s advice and decides, based on their risk tolerance, how to report a transaction. It’s the client’s decision alone. But with these new rules, the law firm itself faces a risk and has to take that risk into consideration. The interests of lawyer and client may not line up.”
Privilege could possibly be waived if a lawyer informs CRA of advice given to a client on whether a transaction is notifiable. “The privilege is the client’s, not the lawyers, and you can’t waive it piecemeal,” says Jack. “There is a possibility that disclosure could imply waiving privilege over everything. It’s certainly a risk.”
Read the full article by author Doug Beazley posted on October 23, 2023.