PwC Australia has been criticised over its misuse of legal privilege to obscure ATO investigations, a trend the Australian Taxation Office has warned will grow as the lines between legal and consulting services continue to blur.
Nick Wilson01 May 2024 • BIG LAW
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Editor’s note: This story first appeared on Lawyers Weekly’s sister brand, Accounting Times.
ATO second commissioner Jeremy Hirschhorn has urged the Senate to turn its mind to the risk of abuse of legal privilege at firms offering both legal and consulting services.
He said the Tax Office had been “disappointed” by the test applied in claiming legal professional privilege (LPP) among both standalone law firms and multidisciplinary firms.
“We [the ATO] have been disappointed with the law firms, whether that is the law division of a multidisciplinary firm or a law firm itself, in how they have gone about doing the test as to whether something truly is privileged,” he said.
“Instead, in some cases, almost viewing it like a negotiating tactic by making a blanket claim and forcing us to go document-by-document.”
While the big four have offered legal services for some time, several large law firms, including Ashurst and King & Wood Mallesons, have recently expanded their non-legal advisory practices.
The idea of a one-stop professional services shop is certainly not new, but Hirschhorn said he had observed a recent trend of law firms “getting into consulting businesses and saying those consulting services are offered under the aegis of a law firm”.
“When I read that, I worry that the exact same problem that we had with the big four accounting firms will be replicated in the big law firms,” he