By Thomas Harban
It is often said that legal practitioners are creatures of client instructions.
At the core of the vast ecosystem that makes up legal practice is the relationship between a legal practitioner and their respective clients. The relationship between the legal practitioner and their clients is mutually beneficial. The differences between other principals and agents, include the risks and consequences.
In carrying out the mandate of a client, the legal practitioner must, in many instances, make undertakings to third parties on the strength of representations and instructions from their clients. These undertakings and representations go to the core of the professional and ethical duties of a legal practitioner and, in the event of default, can expose the legal practitioner to liability or regulatory scrutiny.
To use common parlance, as a legal practitioner you must avoid putting your own skin in the game ahead of (or instead of) that of a client, no matter how entrenched the trust relationship may be between you and your client. At the end of the day, the progress in achieving your mandate is dependent on the cooperation of your clients and the latter must meet their respective obligations and undertakings in order for the mandate to be effectively carried out.
Many legal practitioners who practised before the current electronic payment system, may have experienced instances where inquiries into clients regarding outstanding amounts for overdue fees or even payments to third parties, were met with the common response that ‘the cheque is in the mail’. When the expectation that the cheque would eventually arrive – even taking the slow pace of mail delivery into account – ended in disappointment, the myth in ‘the cheque is in the mail’ response became apparent. In the interim, the legal practitioner concerned may have made undertakings to third parties to whom payment was due. At the end of the day, as is still the case today, the legal practitioner may in some cases need to use their own resources to settle the indebtedness of their clients to those third parties or carry the loss in respect of their own fees and disbursements. Many legal practitioners can relate to tales of the enormous resources spent (and frustrations experienced) in chasing up unpaid amounts due by clients and the potential damage to their own reputations when undertakings to third parties were not met.
A common occurrence is when there is a duty on a client to carry out certain obligations by a certain date. The client defaults on their obligation, but gives their legal representative undertakings that they will remedy the breach and requests an extension of the due date for performance. Such undertakings, which are not always made in writing, can therefore be difficult to prove later if there is a dispute. The legal practitioner, in giving renewed undertakings for performance, could be exposed to risk and allegations of unethical conduct from third parties to whom the performance is due. Be very careful not to damage your good reputation with other members of the legal profession, who may be wary to accept undertakings from you in future, based on the prior lack of compliance by your clients with their obligations which is, unfortunately, sometimes unfairly attributed to the legal practitioner.
Undertakings in respect of instructions
Expressions such as ‘the legal practitioner is awaiting instructions’ or a withdrawal ‘due to a lack of instructions’, depending on the context, are widely understood to be a reference to a lack of funds or cover for fees from a client. In this article, the expression ‘lack of instructions’ is used in the sense that the legal practitioner is awaiting information from a client in respect of a mandate being undertaken. It can be gleaned from the information obtained in investigation of professional indemnity (PI) claims brought against legal practitioners that, in many instances, the legal practitioner concerned could not make progress in the matter as they were waiting for information or an instruction from their client(s). In some instances, the legal practitioner spends months or even years chasing up the client but the latter, despite numerous undertakings, did not provide the required instructions. The date by which an offer is to be accepted or some other option may expire while the legal practitioner awaits an instruction from a client. The latter may later seek to hold the legal practitioner liable for losses suffered as a result thereof.
A delay in receiving instructions may result in a deadline for action by or on behalf of a party not being met or a prescription date being missed. The clients concerned then pursue PI claims against their erstwhile legal practitioner alleging that the latter either breached their mandate or a duty of care in not meeting the deadline. Needless to say, the failure by the client to provide the necessary instructions is not mentioned as a contributing factor in the actions and the fault is laid squarely at the door of the legal practitioner.
Commonly, in a litigious matter a client consults with a legal practitioner and it becomes apparent that certain information is, or documents are required in order to pursue the claim or the defence, but that these are not immediately available. Some investigation on the part of the client may be required in some cases. The client will undertake to obtain the documents, witnesses or information and to furnish these to the legal practitioner but they are either tardy in carrying out their undertakings in this regard or they do not furnish the required information at all. The result is that the claim (if the client is the plaintiff or applicant) or the defence (in the event that the client is the defendant of respondent), as the case may be, can either not be pursued timeously or at all. This exposes the party involved to risk, which they may later attribute to their legal representative.
Many legal practitioners can also recount instances where clients do not make themselves available to timeously sign an important document, which puts the pursuit or finalisation of the instruction in jeopardy.
Mitigating the risk
Legal practitioners are well advised to inform clients clearly of what information and other instructions (documentary, financial or otherwise) they require as early as possible after the mandate is undertaken or when the need to obtain the instruction arises. This must also be followed up in writing with the full details and the date by which the instructions due are recorded. Any follow-ups or change in the due date or progress reports must also be recorded in writing.
The practice adopted by some legal practices to simply keep diarising a file where information is awaited from a client is unhelpful as it may amount to simply postponing a matter that can lead to a potential claim or even a complaint to the Legal Practice Council (LPC). A preferred approach would be to write to the client to record the delay and explain the consequences of their non-compliance and what the implications thereof are. Where necessary, the legal practitioner can consider formally terminating the mandate due to non-compliance by the client with the latter’s undertakings. A prudent approach is to highlight to the client what steps need to be taken to pursue the matter and, in that case, the date by which the next steps must be undertaken. For example, if a date for either prescription, the date of a hearing, the filing of a response or some other step that potentially puts the client at risk is looming, this should be pointed out to the client.
Staff in the firm must be empowered and encouraged to escalate defaulting clients to a senior member of the team who must follow up with the clients concerned. Where the client is a juristic entity, you would also be well advised to escalate the matter to a senior responsible person at that entity.
The written record of the advice to clients regarding their obligations to furnish instructions will assist the legal practitioner in the defence of a claim by the client, a third party or even in responding to a complaint to the LPC. The failure to comply with undertakings cannot always be attributed to the legal practitioner, but this will not prevent parties from trying to do so.
Never place yourself and your practice at risk by giving an unqualified undertaking to perform an obligation on behalf of a client that is outside of your control. In the event that you do, the Legal Practitioners’ Indemnity Insurance Fund NPC (the LPIIF) will not indemnify the practice, as such undertakings are excluded from the Master Policy (see clause 16(j)). A copy of the Master Policy can be accessed at www.lpiif.co.za.
A final word on the subject is to ensure that the client is at all times aware that the success of the legal practitioner and client relationship is ultimately dependant on both parties pulling their proverbial weight. The failure by the client to uphold their end of the obligations is a red flag that must be addressed as soon as possible after it becomes apparent in order to mitigate serious risks potentially emerging later.
At the end of day, as a legal practitioner, you are only as good as your instructions to carry out your mandate.
Thomas Harban BA LLB (Wits) is the General Manager of the Legal Practitioners’ Indemnity Insurance Fund NPC in Centurion.
This article was first published in De Rebus in 2020 (Dec) DR 4.