Client privilege is an important consideration when hiring a professional. This is especially true when it comes to your legal and financial affairs, but it could apply to other aspects of your life, such as working with a therapist. As a general guideline, client privilege is the right of a client to communicate with a professional freely and openly without worrying about that information becoming public. In this article, we’ll explore what client privilege means, circumstances where it can be broken and how it applies to legal and financial professionals. Keep reading to learn more!

Client Privilege

What is the meaning of client privilege?

Client privilege allows professionals to communicate with clients openly and freely to facilitate a productive working relationship. It has become a fundamental right in Canada and other parts of the world. It means that communication remains private, regardless of what is disclosed. Typically, the communication is intended to be private in order to be considered privileged. In other words, you must be a client seeking advice from a professional for client privilege to exist.

Client privilege is important to consider on both the professional and client side because it affects the nature of a working relationship. In addition, it encourages a client to disclose complete, full details, as opposed to omitting information that they may want to conceal for legal reasons. 

What is the difference between confidentiality and privilege?

Generally speaking, privilege is more restricted than confidentiality. Confidentiality covers the entire relationship and work between a professional and a client. But privilege refers to the specific communication between a professional and a client for the purpose of giving or seeking advice. 

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Attorney Client Privilege

When one thinks of the term client privilege, they typically think of an attorney or lawyer. This makes sense because it’s the most common type of privilege, as well as the oldest. Attorney client privilege, or lawyer client privilege, is a client’s right to refuse disclosure of confidential information shared between a client and an attorney. There are many variations of attorney client privilege, but generally speaking, these are the elements:

  • The person of privilege sought to become a client of the legal professional
  • The person who communication was made to is a member of the court or law; or is in connection with this communication and acting as an attorney
  • The communication was relayed with the purpose of seeking legal advice and in confidence

If these three criteria are met, then you, as a client, have the right to attorney client privilege. Let’s take a closer look at what attorney client privilege entails and what you can expect as someone seeking legal advice. 

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Can attorney client privilege be broken?

As you can imagine, attorney client privilege is an important factor when seeking legal advice. You may share details that are private and not want that information to become public. So, are there circumstances where attorney client privilege can be broken? Yes, there are a few circumstances. More specifically, if the client waives privilege, the confidentiality requested relates to a physical object, the client is seeking advice to help commit a future crime or public safety is at risk, then attorney client privilege can be broken. Below are more details about these four exceptions. 

Are there exceptions to attorney client privilege?

  • Waiver. A client can waive their privilege through informed consent. Typically, privileged communication can be shared within a law firm, but must remain there. However, if a third party wishes to access that information, a client may waive the privilege thereby allowing the firm to share details with that third party. 
  • Physical objects. Attorney client privilege is related to conversations and information, but it does not extend to physical objects. You cannot give evidence or any other kind of physical object to a lawyer and expect them to conceal it for you. 
  • Help to commit a crime. If you are seeking legal advice to help you commit a crime, attorney client privilege does not apply. For instance, if you intend to commit fraud and are asking for advice on the best way to do so, you aren’t protected by privilege. On the other hand, you are protected by privilege if you already committed a crime and are seeking legal advice on how to navigate the legal repercussions. 
  • Public safety. An attorney has a legal duty to break client privilege if there is a threat to public safety that outweighs the need to preserve privilege. This is done through the discretion of the professional, but generally, they must answer three questions:
    • Is there a blatant risk to an identifiable person or group of people?
    • Is there a risk of bodily harm or death?
    • Is the threat of danger impending and/or immediate?

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Does attorney client privilege extend to family members?

If your family has an attorney to handle legal matters related to business or other legal affairs, then attorney client privilege would extend to other members of your family. However, this can be sensitive and capricious, so be sure to consult your attorney for details about privilege before disclosing information. 

Does attorney client privilege extend to employees?

Generally speaking, yes, attorney client privilege extends to employees. This means that if you, as a business owner, hire legal counsel for your company’s operations and employees converse with that counsel, the communications are protected by attorney client privilege. In this case, the attorney is serving the entire company as a whole and employees fall under that umbrella, so communication is privileged. However, if you’re unsure or worried, be sure to consult your attorney. 

Does attorney client privilege survive death?

Yes, the duty of confidentiality and privilege survives death in Canada. This means that an attorney is required to maintain confidence of all information disclosed by a deceased client during their working relationship. 

Accountant Client Privilege

Most are familiar with the concept of attorney client privilege, but what about accountants? Often, people disclose sensitive information to accountants and other financial professionals regarding their financial affairs. Protection and confidentiality of this information can become a concern. Let’s take a closer look at accountant client privilege in Canada below. 

Is there accountant client privilege in Canada?

There is no accountant client privilege in Canada. This is true even if you consult an accountant or other financial professional for advice. With that said, registrants of a professional body, such as the Chartered Professional Accountants, must respect confidentiality of information for their clients. This is more so a professional practice to ensure integrity and trust – not a legal requirement.

If an accountant or financial professional is approached for information as a part of a legal proceeding, they have no obligation to keep information confidential and privileged. For instance, if a tax audit is being performed on a business, the accountant must cooperate and provide any financial information they possess, as requested. 

The only gray area in this matter is if you have hired a lawyer to help with your case and financial information is shared with the lawyer as a part of the case. In this case, details of your finances would be privileged and confidential since it pertains to attorney client privilege.

Does an accountant have a duty of confidentiality?

Yes, an accountant has a duty of confidentiality in Canada. In other words, any financial information acquired through a professional or business relationship should not be disclosed to others. This applies to current and past working relationships. 

However, the duty of confidentiality can be broken if there is proper and specific authority. For instance, if the Canada Revenue Agency requests financial information from an accountant of a company, they must disclose this information. But if a random person were to requests information, an accountant would maintain confidentiality. 

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Financial Advisor Client Privilege

Overall, the same rules apply to financial advisors as accountants. Let’s take a closer look at what this entails below. 

Is there advisor client privilege in Canada?

No, there is no such thing as advisor client privilege in Canada. Although, financial advisors do have a duty of confidentiality in Canada. This means that any financial information shared by a client to an advisor is kept confidential to ensure integrity and trust of the relationship. 

A financial advisor is required to disclose financial information if they are asked to do so by an authoritative body. This might be a part of an audit being performed by the Canada Revenue Agency or for a legal court case. Under these circumstances, a financial advisor has no legal requirement to keep your financial information confidential and privileged.

How do I protect myself from a financial advisor?

A routine part of a relationship with a financial advisor is sharing your financial information. A risk of this practice is theft or fraud relating to your finances. Or, the sharing of your financial information with unauthorized parties. Here are some tips to protect yourself from a financial advisor: 

  • Due diligence. Before moving forward with an advisor, research their firm. Are they new to the industry? What do past and current clients say about their services? Have they completed a certain level of education? Performing this research will allow you to understand who the entity is and whether or not they are trustworthy. 
  • Internal controls. If you choose to disclose sensitive information with an advisor, put limitations on what they can do. For instance, if you give your advisor bank access, limit the amount of money they can send or transfer in a day. Plus, limit what information they can see, such as only accessing your investment portfolio, but not your day to day bank account. Alternatively, consult a lawyer to create contracts for the working relationship that protect you, such as a Non-Disclosure Agreement (NDA). The idea is to assess risks with sharing your financial information and input a preventative strategy to address those risks. 
  • Incorporate multiple people. When a person is working alone, it’s much easier for someone to commit fraud and theft. However, when there’s a group of people working on a project, it’s more difficult for them to coerce. This could be involving your bank manager into the process or you routinely reviewing transactions and activities to ensure nothing out of the ordinary is occurring. 

Client Privilege and Protecting Yourself

In summary, client privilege exists in attorney or lawyer relationships, but not with accountants,  financial advisors or other financial professionals. This is important to consider when handling legal and financial matters and the protection of your wealth. If you’re ever unsure of how to protect yourself legally or financially, a wealth manager can help. Complete this quick questionnaire to find a wealth manager!

Read More: Fiduciary Duty: What is it and what it means for your portfolio

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