It’s a phrase we have almost certainly all used – lawyers or not – “have you got that in writing?” And while lawyers may stake a claim for teaching members of the public to be more savvy when settling a dispute or a complaint, we still see examples of firms suffering after falling to follow their own golden rule.
Last month, magic circle powerhouse Slaughter & May was criticised by a judge after the firm was instructed by Ernst & Young over the telephone in relation to a corporate insolvency but did not confirm the instructions or its terms of engagement in writing. Although the firm successfully defended the challenge to have its invoices (totalling €2.76m) assessed, its relationship with the accountancy giant was questioned and this serves as a reminder that, irrespective of whether it is a long-standing client or matter 100, lawyers must still be able to evidence the terms of their engagement or run the risk of wasting valuable time, money and energy arguing over what was agreed at the outset.
In another example, boutique London law firm Clintons were sued earlier this year by a client who had instructed her lawyer to draft and monitor compliance with a shareholders’ agreement designed to protect her interest in a family business following an acrimonious divorce from her husband. The foundation for the subsequent claim was that the agreement had failed and that her share of the marital assets had been reduced. Whilst the client had not provided the firm with enough information for the monitoring element, the lawyer had failed to properly explain the effect of the relevant clauses in the agreement before it was executed. On this particular occasion, the claim was time-barred, but the facts nonetheless illuminate the importance of explaining and confirming any advice in writing.
So do you have to put everything in writing, just to be on the safe side? Let’s look at the rules.
Pre-OFR, the requirements were much more prescriptive. Rule 2.02 (client care) of the Solicitors’ Code of Conduct 2007 set out the lawyer’s obligations at the point of instruction and throughout the course of the retainer, notably to agree an appropriate level of service, identify the client’s objectives, outline the available options and agree the next steps.
However, the SRA Code of Conduct 2011 contains no corresponding provisions, with broad mandatory outcomes and woolly indicative behaviours replacing the specific requirements and detailed guidance notes. It is very much up to the lawyers as to how they meet the outcomes and save for the requirement to provide clients at the outset with written information on making complaints, there no longer appears to be a requirement for things to be ‘in writing’.
However, in view of the lessons learned from the cases referenced above, there are plainly dangers associated with relying on verbal communication and we always recommend the following for best practice and in order to mitigate the risk of disagreement over the exact scope of the retainer:
- Confirm both your instructions and any advice given at the outset and throughout in writing;
- If you don’t want to reissue terms of engagement for repeat clients, consider standing terms of engagement (reviewed periodically);
- Don’t agree to do something which falls outside the scope of your retainer, even if it appears to be straightforward. Be firm with your client and explain that separate terms will need to be agreed;
- If you believe the client’s objectives have shifted since you were initially instructed, seek written clarification;
- Do not rely on information from third parties, unless you have written instructions and authorisation from your client to do so.
Many lawyers are concerned that their terms of engagement are too long-winded and that the longer they are, the less likely clients will be to read them. We do have some sympathy with that point of view, but it is also important to remember that this is your only opportunity to dictate the terms and conditions of your retainer and to protect your contractual position in the event of a dispute.
In summary, it is fair to say that many of these disputes would not have occurred in more trusting and less litigious times, but while some things have changed, the golden rule of having things “in writing” remains unchanged.
Compl-i is the bespoke consultancy service of Weightmans LLP, assisting lawyers with risk and compliance. Developed in response to the increasing regulation and changes brought about by the Legal Services Act 2007, Compl-i delivers a full-service, flexible package of tailored support, including expert legal and best practice advice, as well as assistance on regulation, compliance, business management and structure.