The aim of this short address is to identify some problem areas in daily practice, to give some hints about risk management and to allow you to develop antennae for trouble.
Clients of today are very aware of their rights. They are all too ready to complain and to find fault. It is very important that you do nothing which could give rise to a justifiable complaint and in what I say tonight there is an element of “defensive practice” because unfortunately in today’s competitive and consumer lead society the lawyer must protect his or her own position.
The new Scottish Legal Services Ombudsman has to date supported self-regulation subject to the regulation of our Profession remaining efficient and effective. The Scottish Parliament gave a remit to a Justice Committee to look at the regulation of our profession. Initially, it was a wide remit, it has now been narrowed very much to how the Law Society deals with complaints against solicitors. Ten discussion points have now been published and each and every solicitor has a responsibility to consider those discussion points and provide a view. There is talk of a single gateway for complaints, that gateway might be the Ombudsman’s Office, it may even be something independent from the Law Society. That authority would identify with the client the complaints and deal with the initial stages of correspondence and the investigation. The cost of all of this would likely be borne by the Profession.
At present we self regulate. We are part of a liberal Profession, we have the privilege of higher education and we also enjoy the privilege of self-regulation and that marks us out along with doctors, architects and chartered accountants. However, we have corresponding duties and in the Legal Profession, because we are the gatekeepers to the Courts, there are significant corresponding duties to the Profession’s certain rights. The Scottish Consumer Council argues that there should be an independent body responsible for investigating complaints and regulating our Profession and as indicated the issue is very much on the agenda at present.
A lawyer is many things to many people. In Scotland he is advisor, agent, negotiator, legal draughtsman, advocate and often a form of social worker to his client. There is the wider role as being “the minder of justice”. The lawyer is there to see fair play and to ensure human rights are defended. We operate under a Code of Practice and you will see I have provided for you as an Appendix sources of information which I trust are useful. The Canons of practice in Canada disclose that the lawyer is more than a mere citizen
“he is a minder of justice, an Officer of the Court...a member of an ancient, honourable and learned profession.”
Ultimately though the lawyer must serve the cause of justice, maintain the authority and dignity of the Courts be faithful to clients, be candid and courteous in his dealings with his fellow professionals and “be true to himself”.
In other words the best form of Risk Management is that if a lawyer is not true to himself he might as well give up the practice of law and if his conscience tells him he might be doing something wrong then the lawyer should listen to his conscience.
Duties are owed not only to clients but to colleagues, the Courts, the public and in some cases to third parties.
Some duties are obvious but the first duty is you have to know the law.
The Code of Conduct for Scottish Solicitors conveniently sets out the general “common law” rules following the duties to the various groups we have identified. The Rules govern domestic transactions and for cross border transactions with European countries there is a Code of Conduct drawn up by the Council of the Bars and Law Societies of the European Community. That Code is the model for the Scottish Code and has been followed in a number of other European Countries. There is an IBA Code for international practice setting out general principles. It is important to know these rules in today’s world where clients and their business is much more mobile. Your clients go on holiday, they work abroad, they buy property abroad, they die abroad, even commit crimes abroad. Foreigners come here for business or leisure pursuits in Scotland and so there are many occasions where you will have an International practice element to your work. After the codes there are specific statutory Rules, - subordinate legislation of the Law Society drawn up using the authority given to it under various Acts including the Solicitors (Scotland) Act 1980 and of course the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990.All of these are in the Parliament House Book or in the Greens Compendium published each year. You should keep a set of the Rules in your library and update them as and when. There are constant “glosses” on texts as new cases are reported by Complaints Committees of the Law Society or the independent Scottish Solicitors Discipline Tribunal. You will also get benefit from reading Sections out of the Journal of the Law Society of Scotland particularly the Risk Management page and the Practice page where there are regular articles looking at decisions of the Professional Practice Committee in interpreting aspects of the Code of Conduct and some of the Practice Rules. The Scottish Law Agents Gazette and indeed the LDU Defender are helpful. There are many more books on ethics now than in the past. I have provided a note to you at the end. How did solicitors organise themselves prior to these fancy codes and detailed written rules? Well, good practice evolved. Rules were based on decisions over many years of the Professional Practice Committees and the Discipline Tribunal. Now that there are so many more written rules it is all too easy for the busy practitioner to fall foul of them simply because you do not take the trouble to read them. The trouble with professional practice and Ethics is that everybody thinks he or she knows it all by some process of osmosis but often little is absorbed and a veneer of knowledge exists. I wish to concentrate on one or two areas of difficulty and close hopefully with some little pointers on risk management which will assist.
A. Duties to Clients
The relationship between solicitor and client is based on trust
The client has legitimate expectations of a solicitor:-
(i) that the solicitor give the work due care and attention;
(ii) the solicitor will handle the work competently.
(iii) the solicitor will carry out the work within a reasonable time;
(iv) the solicitor will keep the client fully informed as to progress and any developments which require consideration or discussion;
(v) the solicitor will carry out the instructions of client;
(vi) the solicitor will keep the business of his client and related documents confidential;
(vii) the solicitor will defend the client's interest fearlessly;
(viii) the solicitor will protect his client's legal and human rights;
(ix) the solicitor will be independent and give his client honest and unbiased advice of what is best for the client;
(x) if there is anything which seems to be outwith the solicitor's knowledge or expertise the solicitor will obtain outside advice or send the client to someone else;
(xi) the solicitor will be honest and act with integrity; and
(xii) the solicitor will undertake work in return for a fee which is reasonable in all circumstances.
Many of the problems which arise with clients is that clients misunderstand what you are going to be able to do for them. The client's expectations may be much more than you can deliver. The client may have no conception of the amount of work involved and may be surprised at how long it will take to sort out the problem or indeed how much it is going to cost to do so.
My recommendation is use Letters of Engagement. Set out what you can do, set out how long you think it may take and set out how much it will cost. I attach a style of a Levy & McRae letter of engagement. The Ombudsman as far back as 1997 recommended that the Law Society should introduce a Practice Rule making such Letters of Engagement mandatory. The Law Society has made the recommendation to use such letters and has published guidelines on the Terms of Business in the April issue of the Journal of 1998.
Three years ago the Ombudsman regretted the fact that the Law Society had still not made them mandatory. The Code of Conduct has been amended to set out what information ought to be provided when writing to clients at the start of the transaction (Article 5 (e)). The Scottish Law Agents Society has on its website a style of letter that can be used. If you are not prepared to have a formal Letter of Engagement you should at least follow good practice and send out a letter after the initial interview recording what has been agreed. It is useful to provide an estimate of fees and outlays at the start and if the client is looking for a verbal quote make sure you follow it up in writing. You can only do your best and it is very difficult to discover the length of a piece of string but you have to set out as best you can for your client what your expectation is to ensure that the aims and objectives of the client can be reconciled with the advice you are giving.
B. Duties to Professional Colleagues at home and abroad
(i) Courtesy and respect.
(ii) Do not mislead colleagues do not go back on your word (Article 9 of Code).
(iii) Do not communicate directly with someone else's client.
(iv) Do not stop cheques except in exceptional circumstances and if you do there is immediate restitution.
(v) Implement Mandates immediately and ask questions if you must after.
(vi) Do not "poach" business away by unfair means beyond what competition allows.
(vii) Do not use missives to show off what “a tough guy” you are - do not act unreasonably and string things out unnecessarily.
(viii) Do not grant Letters of Obligation lightly - you must implement what you agree to do: remember to record a Disposition within fourteen days.
(ix) Closing dates, - follow the guidelines.
(x) Take care with Matrimonial Homes Affidavits.
(xi) Unless you agree otherwise you are personally responsible for any other lawyer you instruct.
(xii) If you are dealing with a foreign lawyer it is likely he will know nothing about Scots Law practice and you have to deal fairly with him and assist him and conform to the CCBE Code. If he is a lawyer instructed by you, you will be personally responsible for ensuring his fees are paid unless you agree otherwise at the outset.
C. Duties to the Public and Third Parties
(a) To the Public
The Code of Conduct at 1(c) states that the Profession owes a duty to the public "for whom the existence of a free and independent profession, bound together by respect for the rules made by the Profession itself, is an essential means of safeguarding human rights in the face of the power of the State and other interests in society".
(i) Do not make misleading information available, observe advertising rules.
(ii) In Estate Agency work remember the Property Misdescription Act.
(iii) In exercise of what the Code calls your "civic duty" take an interest in Law Reform and speak up if something needs to be changed.
(iv) Be prepared to take on a pro bono case if some important legal principle is at stake.
(b) Third Parties
(i) To abstain from actual wrong.
(ii) Do not take advantage of unrepresented opposing parties.
(iii) Advise family of legal rights.
(iv) If you are in a "proximate" relationship with a third party you may owe him or her a duty of care - for example beneficiaries who do not receive legacies because you forgot to draft a Will.
In Scotland so far the Courts have followed the traditional line in Robertson -v- Fleming (1861) (4) McQueen. 167. However, in one Outer House case Weir -v- J M Hodge & Son (1990) SLT 266 (OH) it was held that a lawyer employed by one person to do an act for the benefit of another person cannot be liable in damage to the other for the loss of that benefit through negligence. However, with the decision of White -v- Jones (1995) TLT 89 it is possible that the next time a case of this nature comes before a Scottish Court the decision may follow the English line. It is safer to proceed on the basis that your professional duty may extend further than you think and take extra care where third parties stand to gain as a result of the work you are undertaking for a client.
In litigation a Solicitor does not normally owe his client's opponent any duty of care in a hostile litigation but if he steps out of his role as a solicitor and accepts the responsibilities of the opponent then that is a different matter. Solicitors must be careful about giving personal undertakings which might bring the solicitor to having to act for third parties in a way which might make him responsible if things go wrong. In an English case a solicitor acting for the wife in a custody case was found negligent when he let a Passport out of his control and the husband used that Passport to take the children out of the country. The Court said that the solicitor's first duty was to his client and he should have ignored the request for a Passport.
A quick trawl through the decisions of the Discipline Tribunal, Complaints Committees of the Law Society and the Opinions of the Legal Ombudsman over the years soon helps you identify where problems lie and alerts you to areas of difficulty.
The major causes of complaint are DELAY and POOR COMMUNICATION.
The high risk areas are LITIGATION and CONVEYANCING.
In the most recent Discipline Tribunal Report cited:-
(a) conflict of interest;
(b) unconscionable delays;
(c) accepting testamentary bequeaths of more than a token gesture;
(d) failure to fulfil CPD requirements;
(e) failing to renew Indemnity Insurance and
(f) inadequate professional service.
You all recognise conflict of interest. The common law rule is that a solicitor should not act for two parties whose interests conflict or are likely to conflict and if they do they have to cease to act preferably for both but sometimes you can continue to act for one and advise the other to seek separate advice. The Statutory Rules are contained in;
(a) the Code of Conduct at Article 3; and(b) the Solicitors (Scotland) Practice Rules 1986.
Despite the specific nature of the rules they merely repeat the "common law" position in a general clause, Clause 3. I do not intend to deal with definition and interpretation of the Rules but to touch upon specific examples. Conflicts can arise in matrimonial cases and the leading case is Worth -v- Worth (1993) GWD 40-266 which concerned the problems which confront a solicitor acting in a divorce of a couple when asked to deal also with the sale of the matrimonial home. As a direct result of the difficulties which have arisen with solicitors arresting proceeds of sale in their own hands or spouses being unaware of the existence of second mortgages over a matrimonial home, in an article in the Journal of the Law Society 1994 the Law Society pointed out that the solicitor should not take comfort from the Worth decision because the Law Society remained of the view that solicitors should not act for both parties in these circumstances. Guidance was published in February 1994 and the recommendation was that solicitors for spouses should secure prior to sale of the matrimonial home a legally binding Agreement dealing with all financial aspects including what is to happen to the matrimonial home but specifically the agreement must deal with the destination of free proceeds and the allocation thereof. If this is done there is no conflict and one of the solicitors acting for one of the spouses can act for both parties on the sale of the house. In the Worth case Mrs Worth tried to have an Agreement set aside under Section 16 (1) (b) of the Family Law (Scotland) Act 1985 as not being fair and reasonable at the time the Agreement was entered into. The parties had agreed on division and the solicitor had advised them to take separate advice. As is often the case Mrs Worth then alleged a conflict of interest but Sheriff Thomson did not find substance in this. However, if a solicitor is given instructions to arrest the proceeds of sale he cannot do so because this is counter to his obligation to remit funds to the other party. There is a clear conflict and the solicitor must refuse to accept the instruction. If the client insists then the client must go and see another lawyer. If there is no formal agreement the view of the Society is neither the lawyer for the husband nor the lawyer for the wife should act in the sale of the matrimonial property and the updated guidelines now appear in the July Journal issue 1998 at Page 43. Where there is no other lawyer in the district the Law Society recognises that in certain remote parts of Scotland it may be difficult if not impossible to get another solicitor to act. The Law Society has taken a tough line on what constitutes a "remote" area, Granton on Spey does not qualify nor a village in West Lothian because it was considered that other lawyers could be found within reasonable distances.
What the Discipline Tribunal has said is that when a solicitor thinks there may be conflict he must ask himself the following questions:-
1.Does the conflict of interest concern two separate clients?
2. Is the solicitor continuing to act and advise at least one of the clients?
3. Does representation and advice have a bearing on the subject matter of the particular conflict or dispute?
The Tribunal has said that “it is essential that a client can look to his solicitor for advice which is not only independent and impartial but can be seen to be independent and impartial in that the solicitor is not representing the interest of any connected party”.
The Tribunal recently said that “regrettably many solicitors still seem unaware of the serious consequences of continuing to act in a conflict situation and there is considerable current public concern on this aspect of professional practice by solicitors”.
For the purpose of risk management it is important that you maintain record keeping so that you can determine at the outset whether or not anyone else in the firm has acted for another client whose interest might conflict with those of the new client.
Rule 7 of the 1986 Practice Rules is important and that requires a solicitor dealing with an unrepresented party in a transaction involving heritable property to write to the unrepresented party when sending any deed, missive or other document for signature to advise that signature will have certain legal consequences and suggesting the person take independent legal advice.
In Criminal cases there have been a number of complaints of conflict arising despite the introduction of the Code of Criminal Conduct. People consider that this Code is absolutely binding, it is not. It is a declaration by a Committee of the Law Society of what that Committee considered “best practice”.
For example where it says a solicitor “should not act for two or more accused in the same matter” that does not cover every circumstance and there are cases where, (and this is approved by the Legal Aid Board), it is possible to act, where there is no conflict, for two or more persons in a criminal trial.
Specific examples of conflict arise when giving advice to partnerships. I will deal with this under my final heading of risk management. The Law Society in the April 1988 issue of the Journal at Page 45 recognised that there is a conflict of interest between lenders in relation to a Ranking Agreement and the same firm should not act for more than one lender even in the de minimus cases. Consideration must be given to whether there is a conflict of interest between lender and borrower in relation to the Ranking Agreement and each case is considered on its own merits.
In conclusion Solicitors must be careful about conflict particularly as there is a “double deductible” for Indemnity Insurance purposes where a firm has fallen foul of the Rules. Even if the 1986 Rules are the ones which govern your transaction and it may seem that an exemption applies you must remember to apply the overriding general rule and if you are in doubt seek help or apply for a waiver to the Law Society. The simple matter is, if in doubt don't or consult the Law Society via Bruce Ritchie, Director of Professional Practice.
On Confidentiality and Professional Privilege the solicitor has the absolute duty to keep secret any information which comes to him from his client in the course of a piece of business and that duty lasts forever and continues even after the client goes to another solicitor or the client dies. I always distinguish confidentiality which imposes a duty and professional privilege which is your right as a solicitor to refuse to reveal information or produce documents. This is not the time or place to discuss cross border transactions or the CCBE Code of Conduct where there are huge problem areas between those who practice as “in house” lawyers and those who practice as principals in private practice. Privilege is confined to those facts which come to the knowledge of Counsel or Law Agents and to advice given by them during the course of and for the purpose of their employment. The leading case is Micosta SA -v- Shetland Islands Council (1983) SLT 483. This was an Action for damages by the owners of a Greek registered bulk oil carrier MV Mihalis against The Shetland Islands Council as Sullom Voe Harbour Authority in respect of an alleged abuse of statutory power. The allegation was that the Defenders had deliberately abused their statutory powers relating to the management of the harbour to punish the pursuers for having allegedly causing oil pollution. The Pursuers were granted a Commission and Diligence for recovery of documents and amongst the documents recovered were documents in sealed envelopes consisting of correspondence and memoranda between the Defenders and their lawyers for which privilege was claimed. Lord President Emslie in his Opinion reviewed the authorities including the exceptions for fraud and came to the following conclusion - "so far as we can discover from the authorities the only circumstances in which the general rules will be superseded is where fraud or some illegal act is alleged against a party and where his law agent has been directly concerned in the carrying out of the very transaction which is the subject matter of enquiry".
In the case of Balabel & Another -v- Air India TLR 19/3/88 an appeal arose from an action for specific implement of an agreement in which Judge Baker had concluded that the defendants were entitled to withhold all communications which sought or conveyed advice even though parts of them might have contained narratives of facts or other statements which in themselves would not be protected but that documents which simply recorded information or meetings at which the plaintiffs had been present were not privileged. It was pointed out that it used to be thought that privilege related only to legal advice in relation to a contemplated litigation but it was now accepted that it extended beyond that. Public interest required a full and frank exchange of confidence between solicitor and client. The Court of Appeal, however, took the view that the dicta extending privilege without limit to all communications within the ordinary business of a solicitor was too wide. The Appeal was allowed and the formulation adopted by Judge Baker was too restrictive and the phrase "purposes of obtaining legal advice" was to be construed broadly. Where there was a “continuum” of communication to keep people informed and to provide them with the opportunity of giving or receiving advice then everything should be privileged. There are numerous statutory exceptions which erode legal privilege particularly in competition law work.
On Fraud and Criminal Acts no one has difficulties where a client comes in and says he wants to kill his wife and asks how best he can do it without detection and prosecution or where a client wants advice about an offshore investment which sounds very shady. However, what if the advice is about succession rights and a relative of the client then dies in suspicious circumstances or tax advice is turned into evasion rather an avoidance?
The factors for consideration are:-
Governments are vigilant in connection with terrorism, fraud, drug trafficking, firearms offences, money laundering. Lawyers cannot protect perpetrators or alleged perpetrators of serious crimes by the cloak of confidentiality and privilege. Occasionally lawyers are faced with a warrant to search office or home and since this is an Order of Court it must be complied with but the solicitor should only give what is specifically covered by the warrant. If he considers the warrant too wide or unfair he is entitled to deal the documents in an envelope and ask to be heard by the Sheriff.
You may remember many years ago John Carroll and the security search at Glasgow Sheriff Court.
There is of course now a human rights dimension and Article 8 of the Convention on Human Rights protects the rights of privacy in relation to correspondence and provides there can be no interference by a public authority with the exercise of the right unless necessary in a democratic society.
The case of Thomas Campbell -v- The UK, Application No 13590/88483 is well known. This related to the interception of correspondence written by Mr Campbell to his solicitor. The Commission was satisfied there was no pressing social need requiring such interception and a similar view was taken in the case of McCallum -v- The UK.
Another dimension on issues for lawyers is information technology and confidentiality. You have got to think twice before sending copies of e-mails to all and sundry and watch what you put in them. E-mail is subject to interference and you must have security provisions. The European Commission adopted a proposal for a directive on electronic signatures the aim being to harmonise the conditions for authenticating signatures and to provide secure systems for doing business via the internet.
In relation to faxes, the Council of the Law Society has reaffirmed earlier advice that there is a duty on the solicitor to follow up a fax of a contractual document such as missives with the original as soon as possible. If you are instructed not to send the hardcopy the fact must be communicated to the other solicitor immediately and you should withdraw from acting if the client cannot be persuaded to withdraw instructions. E-mails are thought to be equivalent to telephone calls. If instructions need to be recorded then the e-mail should be printed and put out on the file. E-mails which contain attachments are considered to be faxes.
I now turn to retention of documents and ownership of files. An Opinion was given by Kemp Davidson the then Dean of Faculty in 1982 to the Law Society. Essentially the Dean of Faculty separated out what he considered to be solicitor's writs from client's writs and the file could accordingly be divided between what was to be retained by the solicitor and what needed to be treated as the client's own property. At the end of transaction what do you do with the file. In Criminal Legal Aid cases the Legal Aid Board and its own Code of Conduct has now set up what is to happen, namely retention of files for two years and then storage for one year.
So far as the Law Society is concerned this is causing major problems and they have sought out yet a further Opinion from Nigel Emslie QC, then Dean of Faculty (now Lord Emslie).
That Opinion is still the subject of consideration by Council.
There is a difficulty because a solicitor often thinks that he owns much of what is on the file and the client thinks that it is all his but the truth lies somewhere in between. What a solicitor is entitled to are documents prepared at this own expense for his own benefit or protection the preparation of which is not regarded as an item chargeable against the client. Copies of letters from the solicitor to the client can be retained. You also must remember the question of lien. This is a matter of law rather than ethics.
On any topic of risk management I need to refer to the new Accounts Rules and again Money Laundering Regulations. This is not a subject discussed in detail this evening but suffice to say there are ripe banana skins for the unwary and the careless quite apart from those who are dishonourable.
Risk Management determines that one partner in the firm must take a close interest in the accounts, understands the computer printouts so that any inconsistencies or irregularities are spotted.
It is all too easy to rely on the Cashier but ultimately the partners are responsible and in particular the Cash Room Partner.
The new Rules from 2002 govern practice. I have brought my own file notes since I am the Cash Room Partner in my firm. The title of the Rules is the Solicitors (Scotland) Accounts, Accounts Certificate, Professional Practice & Guarantee Fund Rules 2001 which came into operation on 1st February 2002. A Guide has been issued by the Law Society since the new Rules incorporate all of the existing rules for which the Guarantee Fund have responsibility to report on to Council. The new Rules have been reorganised into separate sections for ease of reference and the Rules are arranged in six sections with four supporting schedules and a full index.
The Rules can be a minefield but Rule 6 and Rule 8 are probably the ones most likely to clause trouble and require particular study. Rule 8 used to be Rule 12 and relates to the Accounts which are required to be kept in the Books of the Solicitor.
However, for the purposes of Risk Management Rule 24, (previously Rule 16), is important because every solicitor shall in respect of all other business carried on by the solicitor comply with the provisions of the Money Laundering Regulations as if such other business constituted relevant financial business. The main requirement is record keeping. You must designate a partner with the responsibility for monitoring transactions and identifying possible scams. Whenever someone appears with a large amount of cash and cannot produce evidence as to its source the alarm bells must ring.
You must identify any new client setting up a financial relationship of accumulated value of £12,000 and to be happy about the source of money. The word is "accumulated" because sometimes a transaction may seem to be below the threshold figure but if it is part of a series of linked transactions the overall value may be in excess of the limit. Most of us have an opening file form to remind one of the drill to go through. It is normal to ask for sight of a Passport, Driving Licence, Household Account or something of that nature and to see the principal and to take a copy for the file. Even if you have acted before then you must indicate on the file that. This is another example of "minding your back". Once the identity is established watch the name doesn't change when it comes to writing the cheque. There have been cases where the identity of the client seems fine but the cheque settling the transaction is drawn on a Bank Account of someone different or a company which has never been mentioned. Staff must be trained to spot suspicious transactions and circumstances such as the switching of sources of funding or the setting up of nominee companies whose ownership is not clear.
Alerted to these problems, how you can avoid them or prepare to deal with them. The main tips on risk management are:-
1. Know the law, have a partner responsible for monitoring all professional practice developments, bringing them to the attention of staff, have source materials readily available for consultation. I am giving you the list of sources in the “hand out”.
2. Assess risk element at start of transaction, its complexity, conflicts, knowledge of the firm on the topic and whether there is sufficient time to do the job properly.
3. Supervise your staff and ensure they are well trained - communications with the clients, following up files, recording all phone calls and interviews, filing is vital and ensure staff understand the alphabet. If the file is lost or you are told it is not there then move heaven and earth until it is found.
4. Give a reasonable estimate of fees at the start of the transaction and ensure the client knows exactly what you can do for them - I recommend the Letter of Engagement.
5. If you make a mistake sort it as quickly as possible, be transparent, if necessary direct the client elsewhere for separate advice.
6. Follow the Accounts Rules like a hawk, ensure at least one of your staff is computer literate to monitor entries, spot possible problems and watch out for Money Laundering.
7. Keep the client informed of all developments and explain the procedure and write simple letters.
Whilst this is very much a "tour d'horizon" of a complex subject I am trying to flag up some of the danger areas for you as well as providing some solutions. There are articles published everywhere to protect solicitors.
In Risk Management it is important when taking instructions to understand from whom the instructions are coming. It is now quite common for third parties to attempt to give instructions and I will give you specific examples. Although the instructions may be totally innocent the fact that they have been received from a third party may indicate more sinister motives. We must all be alive to potential fraud. Receipt of instructions from a third party can be an indicator of fraudulent activity.
Where instructions are received from a third party you must obtain written instructions from the client that he or she wishes the solicitor to act. In cases of doubt the solicitor should see the client or take other appropriate steps to confirm the instructions. The third party may be a complete stranger but the more likely third party is where there is a relationship through family, a spouse or business associate. Typical scenarios are:-
(a) A member of the family tries to give instructions for a Will on behalf of an elderly relative.
(b) A member of a family tries to give instructions regarding a Power of Attorney for an elderly relative.
You must take care to ensure that the instructions received are actually what the client wants. In Powers of Attorney it is vital to know the client, the client is the grantor. A solicitor is not a doctor or medical advisor and can make no comment regarding the competence or capacity of the grantor. If in doubt meet the client, if you continue to be in doubt ensure that you take advice from somebody appropriately medically qualified to find out if the grantor understands the Power and can sign it.
In conveyancing transactions where the husband purports to represent his wife's interest in connection with the sale of a house, particularly a matrimonial home and disposal of proceeds, check with the wife. The husband and wife are not one client. They are individuals with separate interests that must be considered. Remember this irrespective of how well you may think you know the clients.
On Partnerships accepting instruction from one partner on behalf of the partnership is dangerous. Are the instructions from all of the partners or just the partners instructing you?
With corporate clients is the individual giving you instructions on behalf of the company authorised to do so? Never make assumptions.
(a) Is there a resolution in place authorising the course of action proposed?
(b) Remember in the case of third party instructions if they are given on behalf of an elderly client or if there is any suggestion of fraud or dishonesty see the client.
(c) In other cases take steps to confirm instructions.
(d) You must represent and protect the interest of your client and not the third party.
(e) Make sure all staff are aware of the dangers of third party instructions.
No matter how well you know the third party and the client whether through business or even socially you need to address the points above. Only in this way can you be satisfied you are meeting your professional obligations.
Further in Risk Management, how do you keep control of files, file checks and prioritise the work? Well you don't need the most sophisticated of IT. What you need is:-
(a) A good desk diary with a central backup system to remind you of important dates
(b) Some good books about time limits especially important ones that get overlooked like aircraft and shipping accidents.
(c) a note pad and pen to record attendance notes every time you see the client or speak to one on the phone
(d) An update on things like Civil Procedure Rules.
(e) Regular supervision including file reviews to ensure that nothing in the filing cabinet goes to sleep.
(f) Regular opportunities to speak to your staff or for your staff to be able to speak to you where they have problems.
(g) The ability to have an open mind on files.
(h) The opportunity to discuss problems and not treat it as a sign of weakness.
(i) A chance to swap the awkward files round the office with someone else in the department.
(j) Well designed check lists for taking instructions.
(k) Training sessions in effective communication skills to flag up how misunderstandings can occur.
(l) An effective system for delegating files so that they don't disappear without trace.
(m) A uniform approach to file management so that you can cover for people who are off sick or on holiday and the files get back to them with updated notes instead of standard letters saying it will be dealt with when such and such a person is back from holiday and then goes back into the cabinet.
(n) Guidance for the Letter of Engagement or retaining letter.
(o) Plain English and letter writing skills.
(p) System for warning on files to protect time limits, a triennium index and a system for warning your Cashier so that files are not overlooked before payments are made so that files can be closed off.
(q) A risk partner appointed to make sure all of these good ideas are implemented.
Finally I thought I would touch upon one aspect of risk management and that arises from those of you who conduct Criminal Court Work. You may have had regard to the case HMA -v- Graeme George Dickie and the Opinion of Lord Hardie in this case which you can see on the Scot Court Website, 14th February 2002.
The present law on contempt was crystallised in three Appeal Court decisions in 1993 two of which were concerned with the late appearance at Court by an accused.
The test adopted is whether or not the accused was wilfully defying the Court and was intending disrespect to the Court, was acting in a way against the Court, and was attempting to pervert the course of justice. Since mere lateness in itself can never constitute contempt it is the reason for the lateness that must be examined to see whether or not the test is justified.
An intention to challenge or affront the authority of the Court and to defy its Orders is a necessary element without which it cannot hold that a contempt has been committed. Lord Hardie in his Opinion dealt with the position of the Advocate and the instructing solicitor. Lord Hardie referred to the case of Ferguson -v- Norman 1994 SSCR 812 in which Andrew Hardie QC, as he then was, was instructed to represent the solicitor.
Lord Hardie recognised on the basis of the authorities from 1993 in particular McMillan -v- Carmichael 1993 SCCR 943 an intention to challenge or affront the authority of the Court or to defy its Orders is a necessary prerequisite for a finding of contempt. Lord Hardie recognised even gross recklessness cannot in law amount to contempt. The test is whether there was a wilful challenge or wilful failure in defiance of the authority of the Court.
For those of us who appear regularly in the Courts, both Civil and Criminal, being on time is fundamental.
Jim McCann, Chairman of the LDU was instructed by the solicitor in that case and Jim prepared some years ago for the LDU Advisors a detailed note on issues such as contempt and how to avoid contempt.
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