Solicitor Client Relations II

Authority

The solicitor client relationship is based on contract.  It also has an agency element.  Furthermore, the solicitor is a fiduciary in relation to his clients and is restricted from taking advantage of his position or acting in conflict of interest.

The scope of a solicitor’s authority is defined by the general law of agency.  Express or implied authority may arise to do particular acts.

General principles of the law of agency apply.  Generally, an undertaking by a solicitor will be interpreted as being his personal undertaking rather than being an undertaking by the client given as agent.

A solicitor, who is appointed to undertake litigation, has implied authority to manage and run the actions.  If the solicitor commences litigation without instruction, the litigation may be struck out.  Alternatively, the client may ratify the proceedings. A solicitor who undertakes actions without authority may be liable to another for breach of warranty of authority.

The client’s authority is necessary for key stages in the litigation including  offers and proposals relevant to the merits on settlement. A solicitor would not normally have authority on his client’s behalf in commercial, non-litigation matters.  Such an authority would need to be expressly given.

A solicitor would not have authority to sign contracts, and the deed in the normal course without specific authority. He would have authority to complete certain ancillary aspects of the transaction on his client’s behalf in the context of conveyancing matters.

Confidentiality

The relationship of solicitor and client entails duties of confidentiality.  The solicitor must not divulge or disclose matters relating to the client without the client’s consent.  The obligation of confidence arises due to the equitable nature of the fiduciary relationship.  It may be provided for in a contract as well.

The duty of confidentiality may be exceptionally overridden.  If for example, there is a dispute between the solicitor and client, certain aspects of confidentiality may be impliedly waived.

The duty of confidentiality is reinforced by certain privileges in litigation against discovery.  However what is confidential as between solicitor and client is significantly wider than what is not discoverable in litigation.

Legal Advice Privilege

Many communications between solicitor and client may be subject to solicitor‐client privilege.  This means that they cannot be compelled to be discovered in subsequent legal action whether on discovery or by way of question at trial.  The objective is to ensure full and frank communications between the solicitor and client without fear of matters discussed being subsequently disclosed to third parties to the prejudice of the client.

See generally the sections in relation to evidence law.  There are two distinct types of privilege.  One is legal professional privilege.  The other is litigation privilege.

Legal professional privilege relates to the communications for the purpose of legal advice.  However, communications, which go beyond advice such as matters of fact or matters outside the scope of the authority, would not be privileged.

The terms of the relationship between the parties are privileged.  The obligation of confidentiality extends from pre-retainer (engagement) matters and survives the termination of the retainer.

The client may waive the privilege.  The solicitor may not do so, without the client’s consent. Where a solicitor deals with parties jointly, the confidentiality may not subsist as against other jointly interested persons.

Privilege continues to apply as between solicitor and successors of the original client.  This may happen in the case of personal representative receivers, who are deemed agents of the mortgagor and an insurer who has the same interest as the insured.

Privilege Exceptions

There are certain exceptions to the general principles of confidentiality and privilege.  A disclosure may be made, if it establishes the innocence of a party in criminal proceedings.

Communications in furtherance of a fraud are crime and are not privilege.  This is so even if the solicitor believes he is acting in good faith.  It is necessary to give presumptive evidence that the communication related to a fraud or crime.  However, it must be shown that communication was in furtherance of the crime in order to be privileged.

Litigation Privilege

The second type of privilege relates to ongoing or contemplated litigation. Litigation may be implicitly contemplated. This privilege is broader in that it protects most communications and things done for the purpose of litigation.  The communication must be for the principal purpose of receiving legal advice or as an aid to litigation.

This type of privilege may cover reports, and discussions with the parties, communications  from and discussions with third-party experts et cetera in the context of possible litigation.

The solicitor-client privilege may be waived by the client.  The waiver may be implicit or explicit.  It may be waived where the client communicates to the third-party  in such a way as to show  that the intention to keep confidential is waived.

Once a communication is waived in part, it may be deemed to be waived as to the whole of matters concerning the subject matter concerned.  Where the client sues a solicitor there is an implied waiver of privilege in relation to matters required by the solicitor for his defence.

Without prejudice negotiations in the context of a proposed settlement are privileged.  The attachment of the label is not definitive.  The circumstances must fall into the above category. Without prejudice correspondence may be produced to show that the settlement itself exists, and to prove its term.

Clients & File

Generally, on termination of a matter,  the client has a right to the file.  Some documents on the file will be the client’s property.  The solicitor may have a lien for his fees on the file. Documents prepared by the solicitor for the benefit of a client which have been paid for belong to the client.  This may include instructions, briefs, letters to third parties and documents prepared by third parties in the context of the brief.

Documents prepared by the solicitor for his own use and benefit, non-chargeable items, interoffice memorandum, books of accounts and certain other documents may belong to the solicitor.

There is a procedure in the court rules where by a client may require a solicitor to deliver  property belonging to him.  Under the court’s inherent jurisdiction, the solicitor may be ordered to deliver up documents in his custody, on which no lien exists.

AML

Solicitors are subject to money laundering obligations.  See generally the provisions on money laundering under the criminal law sections and banking sections of this guide.

The solicitor owes obligations to establish and retain evidence of the identity of clients.  He must establish procedures to ensure the legislation on money laundering and terrorist financing are complied with.  He must notify the authority of certain suspicious transaction.  He must not tip off his client.

Breach of money laundering legislation is a serious offence.  A solicitor as fiduciary must avoid conflict of interest.  The solicitor must be free to represent his own client without any question of a conflict.

Conflicts

The solicitor may have a personal conflict, where he has a stake or interest in the subject matter of the business concerned.  A solicitor may have a conflict in acting or continuing to act for two persons whose interests are in conflict.

Where a conflict of interest arises, it must be disclosed, and the solicitor should cease to act.  He may sometime act for one with the consent of both. However, in most cases  he should cease to act because may have confidential information, which prejudices one or other client. The general recommendation is that the solicitor should cease to act for both parties.

There are some specific provisions by regulations where solicitors may not act for both sides.  A number of specific provisions have been made in the context of conveyancing transactions.  These declare matters of professional practice and conduct and breach of them is a disciplinary matter.

Conflicts may  arise in relation to a partner or the firm.  All members of the firm will be treated as one for the purpose of the principle.

A solicitor may not settle a personal injuries claim affecting a minor without issuing proceedings and having the matter approved by court.

Fiduciary Duties

Solicitors are fiduciary in relation to their clients.  See generally the sections on equity, agency and trust in relation to the implications of this relationship. A client engaging in a transaction with a solicitor is presumptively subject to undue influence.  At the very least, the client should be independently legal advised.  The solicitor should preferably cease to act. Independent legal advice for the client is a minimum.

Transactions between solicitors and clients and former solicitors and clients are subject to the presumption of undue influence.  A solicitor may have inside information regarding his client’s affairs so that doing business may constitute a breach of fiduciary duty.  Generally doing business would be incompatible with fiduciary duty.

A solicitor may not make a secret profit from this role as fiduciary.  Any profit, reward, commission et cetera must be disclosed to the client.  Otherwise, the transaction may be set aside.

Litigation Conflicts

A solicitor should not appear as an advocate if he is a witness in proceeding.  This is presumptively a conflict of interest.  A solicitor who completes the declaration may not do so in proceedings in which he himself is involved.

Generally, a solicitor should not act as advocate in matters in which he is personally involved as this may conflict with his duties to the court. The same principle may apply to acting in matters in which a person connected with him such as a family member is involved.

Benefits taken by solicitor’s influence are liable to be set aside given with independent legal advice.

A solicitor cannot generally act for both sides to a dispute or act for two parties who have conflicting interest.  A solicitor may act for two persons, with a joint or same address in a matter.  This will commonly occur.

Conflict Issues

Difficult questions arise when a solicitor acts against a former client.  If there is  confidential information, there may be a conflict and he may be precluded from acting.  A conflict of loyalty may arise adverse to his duties to the second client.

Generally a solicitor should not take on adversarial role relative to a former client in relation to a matter on which he was formerly retained.  An application may be made to court to disqualify a solicitor acting and so acting in such circumstances.

Particularly difficult issues can arise in the context of a company.  The company itself is a distinct entity from its directors and employees.  A solicitor must take care to ensure that he does not inadvertently come into a  conflict of interest particularly where his client is most likely to be the company itself rather than the director.

Conflict issues arise in criminal matters in a more pointed way.  There is a public interest in the accused having a free and fair trial.

Where a solicitor represents two accused, a solicitor may not represent both the co-accused where there is any question of a conflict.  The accused may waive certain conflicts.  Similar issues arise in civil and criminal matters regarding dealing in matters and acting in matters in which former clients are involved.

Conflicts Limits

A solicitor may act for both the insurer and the insured provided that there is no conflict of interest.  There may however be instances where issue of questions of conflict may arise in acting for both insured and insurer.

If the risks are clearly covered, the solicitor may act for both insured and insurer.  If there is a denial of coverage, there is a clear conflict.  Where there is dispute about coverage there will generally be a conflict depending on the circumstances.  Where the question of coverage is reserved, there is a risk of conflict.

Where there are relatively few solicitors with the requisite expertise and client are willing to accept the potential conflict, different parts of larger firms or branches of firms may act.  So called Chinese Walls involve controls on information flow and monetary measures.  In the UK they are accepted in certain cases as sufficient to avoid conflict.