Old lamps renewed

The Solicitors’ Code of Conduct 2007 contains provisions which are particularly relevant to practitioners dealing with elderly and vulnerable clients. ROBERT CRAIG asks what are the new provisions, and are they clear and workable?

The Solicitors’ Code of Conduct 2007 came into force on 1st July 2007 and replaced the bulky Guide to Professional Conduct [8th edition 1999], with which we have all become familiar, with an even larger Code that is still available only online and has to be downloaded.

As with the 8th edition, the format of the Code is to set out a series of broadly based principles – the ‘rules’ – and then to provide more or less extensive ‘guidance’ in the form of a commentary on each rule. The rules are mandatory, but of course, as they are broadly stated, there will always be problems with and arguments about their application. The guidance is not mandatory and does not form part of the code, but it will always need to be studied to understand the practical application of the generally more abstract rules. Even though the guidance is not binding, only a brave soul will disregard it.

Rule 2 covers client relations, and rule 3 deals with conflicts of interest. The purpose of this article is to focus on, within these rules, the areas that have a direct bearing on solicitors dealing with elderly and vulnerable clients. Such clients will also be covered by many other provisions of the code, in the same way as the broader range of clients.

Taking instructions

Rule 2 covers client relations, and under rule 2.01 (taking on clients), it deals with two of our problem areas – instructions given by third parties and clients under duress or undue influence.

The old Guide dealt with third-party instructions by requiring the solicitor to obtain written instructions for the client. In any case of doubt, the solicitor should see the client or take other appropriate steps to confirm instructions. The Code does not require written instructions in such cases, but says that the solicitor “must not proceed without checking that all the clients agree with the instructions given.” (2.01(1)(c)) There is no guidance here on the frequent case where spouse or partner gives instructions on behalf of both, in circumstances that do not give rise to any suspicion. Does the rule require the solicitor to say that they cannot do anything at all without getting the instructions confirmed, or are you simply not to finalise the transaction, get a Will or Power of Attorney signed or similar, until you have checked that the absent co-client agrees?

The rule as framed seems to bring forward to the earliest stage the requirement to check. It will no longer be advisable (if it ever was) to take detailed instructions from a third party, even one spouse, perhaps all the way to the stage of preparing an engrossed Will. In the case of joint instructions, say for husband and wife Wills, you should no longer rely on instructions coming from one alone, or not speak to the other spouse until the stage of presenting an engrossment at an appointment. You will have to obtain and record confirmation from both joint clients at the outset. This has always been good practice, and the rule will give greater authority for the solicitor to say: ‘I simply am not allowed to start dealing with [typically] your wife’s Will unless she tells me herself that I should do so. I really think you should both come in to see me.’

Duress and undue influence

The old Guide stated in five clear lines that you could not accept instructions that you suspected had been given under duress or undue influence. The rule was mandatory but subjective. The Code (2.01(1)(d)) and its related guidance puts a greater burden on the solicitor by saying that you must not act on such instructions where you know or have reasonable grounds for believing that they are affected in this way. This is an objective test and will perhaps lead you to ask not just ‘Is the client acting of their own free will?’ but ‘Will it look as if the client was doing so when my handling of the matter comes to be examined?’. This is almost certainly a higher and better standard and will enable you better to disregard the blandishments of a relative or ‘friend’ who says that, of course the client wants this or that to be done, however unlikely it may seem.

Where the Code then goes astray is to say that you may not act on those instructions “until you have satisfied yourself that they represent the client’s wishes”. This is not very happily worded. You would have thought that if the instructions are, or appear to a reasonable person to be, affected by duress or undue influence, there should be a blanket prohibition on acting on the instructions. How can you satisfy yourself that the instructions represent the client’s wishes if you believe that they are affected by, for example, undue influence?

The guidance reminds the practitioner that the elderly and those with disabilities are particularly vulnerable to pressure from others. “If you suspect that a client’s instructions are the result of undue influence you need to exercise your judgment as to whether you can proceed on the client’s behalf. For example, if you suspect that a friend or relative who accompanies the client is exerting undue influence, you should arrange to see the client alone or if appropriate with an independent third party …” This will helpfully reinforce the position of the solicitor, who will be able to say with even more force than previously that it is essential to see the client on their own, as they should always have done. However, the guidance goes on: “Where there is no actual evidence of undue influence but the client appears to want to act against their best interests, it may be sufficient simply to explain the consequences of the instructions the client has given and confirm that the client wishes to proceed.”

This is a simplistic approach, because uncovering ‘evidence’ of undue influence is difficult at the best of times. We have usually drawn an inference from the fact that instructions seem to be influenced by a hovering third party, who is keen to get a Will made or a transaction completed which is out of character for the client, or against the client’s interest. Indeed, very often the main indication of undue influence is that the client avers in the strongest terms that the disadvantageous transaction could not possibly have been influenced by their ‘friend’. Simply explaining the consequences to the client and getting their confirmation that they want to proceed is hardly likely to give the client adequate protection. To say ‘You must not act on those instructions until you have satisfied yourself that they represent the client’s wishes’ (and that it would be ‘sensible to get this confirmation in writing,’) does not cover the frequent situation where the client has been over-persuaded long before they arrive in the solicitor’s office. The client is emphatic as to what they want, but the experienced practitioner has a serious doubt whether this is a decision reached by free will. Both the fundamental principle 2.01 (1) (d) and the guidance seem to fail to address the real problem.

The guidance for such a situation should surely have been more robust, requiring a firm ‘health warning’ to be given to the client, preferably in writing. Best advice to the solicitor must still be that in these cases, if you have a serious concern, you should refuse to handle the matter, and write a letter placing your reasons on record. Yes, it is true that the client may be led off to another solicitor who has a higher threshold of suspicion, but you will have covered yourself and done your best to protect the client. One suspects that these rules have been drawn up without too much input from people who deal very frequently with these problems in the field of elderly clients.

Ending the relationship

The Code says that you “must not cease acting for a client except for good reason and on reasonable notice.” (2.01(2)) The guidance on 2.01 tells you that you must cease acting if your client loses mental capacity but “it is important that the client, who is in a very vulnerable situation, is not left without legal representation. Consequently you should notify an appropriate person … or you may look for someone legally entitled to provide you with instructions.” An appropriate person might be the Court of Protection or an attorney. The draftsman adds: “This is a particularly complex legal issue and you should satisfy yourself as to the law before deciding on your course of action”. See a solicitor!

The guidance to rule 2 gives the example of a case of good reason to cease acting “where you are unable to obtain proper instructions”. Presumably, instructions which are not ‘proper instructions’ are those which are affected by undue influence or duress, or which come through a third party in circumstances where you cannot get confirmation from the client. Perhaps we should all adopt more strong-minded action and terminate the retainer in these circumstances.

Conflict of interests – gifts from clients

Rule 3 deals with conflict of interests, and here rule 3.04 dealing with accepting gifts from clients is particularly relevant, although not always easy to apply in practice. If a client proposes to make a lifetime gift, or a gift on death, to you or any principal or employee of your firm, or a family member of any of them, and the gift is of a ‘significant amount,’ “you must advise the client to take independent advice about the gift, unless the client is a member of the beneficiary’s family. If the client refuses, you must stop acting for the client in relation to the gift.”

This is virtually the same wording as under the Guide, but there is now an explicit exception to the need to get independent advice in the case of family members. The guidance on this part of the Code is in paragraphs 56 to 63 in the section on rule 3, and is far more extensive than previously.

Significant amount

‘Significant amount’ is to be assessed “either in itself or having regard to the size of the client’s estate and the reasonable expectations of the prospective beneficiaries...” The guidance explains that this rule does not prevent you accepting a client’s gift but does require the client to take independent advice. A ‘significant amount’ is not quantified because the particular circumstances of the proposed gift must be taken into account. However, the guidance says that, “in general anything more than a token gift will be considered significant.” (paragraph 59) “If, therefore, anything more than a token amount is accepted without the client having separate advice [except when you are acting for a family member in permitted circumstances] you may be exposed to allegations of misconduct”.

Independent advice

In any of these cases where independent advice is required, if the client refuses to take independent advice, “you must stop acting for the client in relation to the gift.” The words ‘in relation to the gift’ are significant here. You do not have to say to the client that you will stop acting completely, simply that you are only prepared to draft the Will and present it for signature if you omit the particular gift that is likely to cause problems. (This is a clearer wording than in the old Guide.) It is then open to the client to go to an independent solicitor and prepare a Codicil including a gift to you if they are so minded.

Gifts from family members

Rule 3.04 allows you to prepare a Will for a family member under which you receive a significant gift without requiring the client to seek independent advice on that gift. However in these cases you should always exercise “extreme caution” because the risk of conflict is “very high”. This section of the guidance seems to be drafted more for the protection of the solicitor against aggrieved siblings than for the protection of the client. Much depends on the reasonable expectations of the other prospective beneficiaries. If a gift to you as a family member is “disproportionately large” you should ensure that the client is separately advised on that gift. It would have been helpful if the guidance had explained the position here in plain English, in the way that the Ethics and Guidance Helpline has done in the past. If a testator has three children and there are no special family circumstances pointing to one receiving more than another, then a gift of one-third under an ordinary Will in favour of a solicitor child is unlikely to raise any eyebrows. If, on the other hand, the solicitor is significantly favoured, either in terms of percentage or special gift of chattels, or in some way that is likely to raise the hackles of the rest of the family, then both as a matter of professional conduct and self-interest it is sensible to arrange for the testator to be given independent advice.

One case that I have come across several times is where a solicitor makes a Will for a parent who has remarried. Invariably, the widow or widower is insufficiently provided for, and the testator was not advised to take independent advice, let alone the solicitor refusing to act if the testator declined. It is only too easy to fool yourself into thinking that the surviving spouse has a sufficient benefit under the Will and that because all the children benefit equally, the solicitor has done their duty. This will almost certainly be a case where independent advice is required for the protection of all concerned, and as far as the solicitor is concerned, the independent advice will be essential to avoid a complaint of professional misconduct.

Cohabitees

Incidentally, a cohabitant is not included in the exception to independent advice, so such advice must be obtained where the Will is made by a cohabiting solicitor, or where the testator is the cohabitee of a family member of the solicitor. Family member is not otherwise defined, but the guidance indicates that it includes those related by blood, marriage (and presumably civil partnership) or adoption.

In summary

Overall, these provisions regarding elderly and vulnerable clients and accepting benefits from clients will not cause you any surprise, or lead to major changes of practice. However, it is essential to study in detail rules 2 and 3 and their guidance, to draw them to the attention of your colleagues, and to be alert for the familiar situations that are going to bring you or your firm into conflict with the Code of Conduct. These are not ‘new lamps for old’ but ‘old lamps renewed’. Nevertheless the restatement and refinement of principles is generally welcome and the problem, as ever, is not ignorance of these fundamental principles but remembering to apply them and not kidding ourselves that ‘in the case of old Mrs Smith or Auntie Emma these rules just do not apply to me!’

Robert Craig is a partner in the Private Client department at Finers Stephens Innocent LLP, and a panel member of the Solicitors’ Assistance Scheme. robert.craig@fsilaw.com