#4947 - The Code - Professional Conduct

You are generally free to decide whether or not to take on a particular client, provided you don't unlawfully discriminate.

There are a number of situations where you CANNOT accept instructions:

• O(1.3) – where acting would involve a breach of the law or breach of the Code:

  • Conflict of interests

  • Suspected money laundering/terrorism financing

• O(1.4) – where you have insufficient resources or skills to carry out the instructions.

  • O(1.5) – if the matter is outside your expertise or if you are too busy/or unable to take on the matter in the timescale required by your client.

O(1.2) – you must protect the client’s interests in a matter.

• IB(1.25) - Where instructions are given by somebody other than the client, you cannot act UNLESS you are satisfied that the person given instructions has the authority to do so on behalf of your client.

  • When you are acting jointly for two/more clients but instructions are only given by one client, you cannot act UNLESS you are satisfied the person giving instructions has authority as above.

  • SITUATION: if someone purports to act on behalf of a company. Ask for a copy of the resolution of the board of the company authority the person to act in their capacity. Undertake a CH search of the company to verify the person is a director, or check the company’s website.

• IB(1.28) – you cannot act where you have reasonable grounds for believing that instructions are affected by duress/undue influence without satisfying yourself that they reflect the client’s instructions (this could happen in a marital situation – particularly where the marital home is being used as a security for a husband’s business loan).

• O(1.1) – in order to treat your client fairly and reduce the chance of complaint, it is recommended you send a CCL setting out the terms and conditions under which you are acting.

• O(1.2) – provide services which protect their interests in their matter

• O(1.5) – provide a competent service to the client

• O(1.7) – inform clients whether and how your services are regulated

• O(1.12) – ensure you that your clients are in a position to make informed decisions about the services they need and the options available to them.

• IB(1.1) – agreeing an appropriate level of service with your client (e.g. frequency of communications).

• IB(1.2) – explaining your/the client’s responsibilities.

• IB(1.3) – ensuring your client is told in writing the name and status of the person dealing with their matter and the name/status of the person supervising.

• IB(1.4) – explaining any arrangements such as fee sharing or referral arrangements.

• IB(1.5) – explaining any limitations or conditions on what you can do.

• IB(1.6) – having proper regard to your client’s mental capacity/vulnerability (e.g. do you require a translator?)

• O(1.6) – you should only enter fee arrangements which are legal and which you consider suitable for the client’s needs – taking into account their best interests.

• O(1.13) – ensure your clients receive the best possible information both at the time of engagement and during the progress of the matter about the likely overall cost.

• O(1.14) – ensure clients are also made aware of their right to challenge/complain about the bill and when they may be liable to pay interest on an unpaid bill.

• IB(1.13) – discussing with the client whether the outcome will justify the expense/risk involved in the case.

• IB(1.14) – clearly explaining to your client how fees will be calculated and if or when they are likely to change.

• IB(1.15) – warning the client about any other payments that may be incurred (e.g. disbursements)

• IB(1.16) – discussing with the client how they will pay your fees and whether public funding may be available, or whether a 3^rd party will cover their costs (or a trade union or legal expenses insurance).

• IB(1.17) – conditional fee arrangements – giving all the relevant information.

• IB(1.18) – explaining certain things when acting for a publicly funded client.

• IB(1.19) – providing the information in a clear and accessible form which is appropriate to the needs of the client.

• O(1.7) – you must inform your clients how your services are regulated.

• O(1.9) – the client’s right to complain

• O(1.10) – clients must be informed of their right to complain to the Legal Ombudsman and the details of timeframes and how to contact…

• IB(1.22) – having a written complaints procedure which is brought to the clients’ attention at the outset of the matter and is easy to use and understand.

O(1.15) – you must properly account for any financial benefit you receive as a result of your instructions.

• IB(1.20) – if you receive a financial benefit as a result of acting for a client, you must:

  • Pay the financial benefit to the client, OR

  • Offset it against your fee, OR

  • Keep it only where you can justify doing so provided you have told the client the amount and the client has agreed you can keep it.

Principle 6 requires you to behave in a way that maintains the public trust in you and the legal profession. Once a solicitor has started to act for a client in a matter, he shouldn't cease to act until the matter is complete. UNLESS:

• O(1.1) – treat your clients fairly

• O(1.3) – comply with the law and the Code when terminating your instructions

• IB(1.26) – you may not comply with the C1 outcomes and Principles if you cease to act for a client without good reason/reasonable notice.

  • Otherwise, how could you satisfy Principle 4 – acting in a client’s best interests, or Principle 5 – providing a proper standard of service?

  • Furthermore, if you terminate for a better offer (i.e. more money), you are breaching Principle 2 –acting with integrity.

• Cannot obtain clear instructions from the client

• To carry on doing so would be a breach of the law or Code

• Your client has failed to pay its bills

Chapter 3: Conflicts of Interest

You are generally prohibited from acting for a client where:

• O(3.5) – there is a client conflict – i.e. an actual/significant risk one of your new client’s interests conflict with the interests of another client in relation to that/a related matter.

O(3.3) requires that your systems and controls for identifying client conflicts are appropriate for the size and complexity of your law firm.

You should do a conflicts search against a client in a potential transaction:

• Client name and target name/number

• Company number

• Names of any counterparties to the matter

• Names of directors of the client

There are two situations were you can:

• Glossary definition – there is a clear common purpose and a strong consensus on how it will be achieved and the conflict is peripheral to the common purpose

• AND all of the O(3.6) sub-factors apply.

Relevant IBs:

• IB(3.2) – you should generally not act for clients whose interests are in direct conflict.

• IB(3.3) – you should generally not act where negotiation would be involved.

• IB(3.5) – you may have to decline to act if one client would be prejudiced by not being separately advised.

  • This links in with IB(3.12) – unequal bargaining power.

• IB(3.11) – the SCI exception won’t apply if the parties interests in the end result are not the same (i.e. they are one opposite sides of the transaction – e.g. a buyer and a seller in a property transaction).

EXAM TIP: you should also explain to your clients that if their interests later diverge, you may have to stop acting for one of them and they will incur expense/time in instructing a new firm.

EXAM TIP: consider the client – if you are dealing with sophisticated clients who understand the issues and risks of acting for both of them, it is more likely you won’t contravene O(3.6).

It is very rare that you will be able to act for the buyer and seller. There are limited circumstances where you may be able to (i.e. where they are not transacting at arm’s length – related by blood, associated companies).

• IB(3.11) – the SCI exception won’t apply if the parties interests in the end result are not the same (i.e. they are one opposite sides of the transaction – e.g. a buyer and a seller in a property transaction).

• IB(3.14) – you will not be able to act for a seller and buyer in a transaction (non-mandatory).

• Start by applying O(3.5) and O(3.6).

• IB(3.7) – you can only act for a lender and borrower if the mortgage is a standard mortgage, if it is a private residence, you are satisfied it is reasonable and in the party’s best interests to act, and the certificate of title required by the lender is approved.

Even if IB(3.7) is satisfied, don’t assume you are able to act – there may still be an underlying conflict.

EXAM TIP – this is RARE and will generally only apply when the clients are sophisticated users of legal services.

• Glossary definition: This will apply if two or more clients are competing for an objective which, if attained by one client would make it unattainable for the other.

• AND all of the O(3.7) factors apply.

Relevant IBs

• IB(3.5) – you may have to decline to act if you cannot act even-handedly between clients or if one client would be...