The lawyer client relationship PDF

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Chapter 3 THE LAWYER-CLIENT RELATIONSHIP Dal Pont Ch 3 A. Creation of the Relationship 

the retainer as a contract

Retainer is a term used to describe a contract between a lawyer and a client for the provision of legal services and so it must be proved like any other contract. This means that a retainer does not exist unless the elements of a contract are present: 

offer, acceptance, intention to enter into legal relations

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Agreement (whether in writing or orally)

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Consideration

Note: while a retainer is a contract, there are some limitation placed on the freedom of contract with respect to the creation of a retainer. Importance of a retainer 

The retainer identifies the client and prescribes the services expected of the lawyer

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This defines whose instructions the lawyer acts, the scope of his authority and the scope of his duties.

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The retainer charts the parameters of the lawyer’s duty of care in tort to the client. A lawyer owes no tortious duty to advise a client on matters outside the boundaries of the retainer.

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The retainer also sets the parameters for other duties owed by the lawyer: including fiduciary duties and duties of confidentiality. o

Fiduciary duties owed to the client only last for the duration of the retainer

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It is evidence of a lawyer-client relationship that in turn enforces legal professional privilege.

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Without a retainer, a lawyer has no contractual claim to costs and disbursements from a client.

Terms of the retainer Express terms 

The retainer may include both express and implied terms.

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Any ambiguity in an express term that leads to a dispute will be construed contra proferentem against the lawyer. o

This is because the lawyer is the one who drafts the retainer, and he or she should not receive the benefit of an ambiguous expression by dint of his or her stronger position.

Implied terms 

Various terms are implied into the retainer as a matter of law.

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Most basic implied term: lawyer must use his or her best endeavours to protect the client’s interest and to exercise reasonable care and skill in carrying out, by all proper means the client’s instructions in the matters to which the retainer relates.

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This implied duty replicates the lawyer’s duty of care in tort

Other implied terms: o

Authority to do all things incidental to the object of the retainer

o

Requiring the lawyer to maintain lawyer-client confidentiality

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Client may argue that an implied retainer exists because he or she wishes to hold the lawyer accountable for a breach of duty of care.

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In determining the existence of an implied retainer, the court will adopt the perspective of the alleged client, objectively.

Parties to the retainer Importance of identifying the client A lawyer should take reasonable measures to ascertain a client’s identity as soon as reasonably practicable before accepting instructions to act in a matter. Challenges may arise where instructions are received from an agent on behalf of a principal client, in which it is important for the lawyer to take reasonable measures to ascertain the principal’s identity before accepting instructions to act in the matter. In the case of joint clients, the lawyer must ensure that their authority to act represents the joint will of the clients. 

In such a scenario, the lawyer may only communicate with an individual client with the authority of the other clients.

Retainer agreements with counsel Proof of the retainer Oral Retainers The person alleging the existence of a contract bears the onus of proof, a lawyer alleging the existence of a retainer that is not in writing can adduce evidence in the form of words and conduct (subsequent conduct is allowed) of the parties. 4 evidential difficulties: 

Evidence of conduct is rarely unequivocal

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Time tends to reduce the detail of recollections of relevant evets

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Words and conduct rarely address the details of the representation and a court cannot and will not substitute its view for the unexpressed view of the parties

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Where the evidence consists of the lawyer’s word against the client, the court ordinarily sides with the client (when all else is equal).

Griffiths v Evans: “the word of the client is to be preferred to the word of the solicitor because the client is ignorant and the solicitor is or should be learned”. A lawyer who does not take the precaution of getting a written retainer has only himself to thank for being at variance with his client over it and must take the consequences. Implied retainers

The existence of a retainer can be implied, and the onus of proof is on the person alleging the existence of the retainer. 

If the lawyer is seeking to recover fees from a client, the onus is on him or her to prove the retainer

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The client bears the onus of proof if he or she wishes to render the lawyer liable for a breach of legal or equitable duties (but there must be a causal link between that breach and loss that the client has suffered).

Proof rests on proof of facts and circumstances sufficient to establish a tacit agreement to provide legal services. 

Its existence is determined by inference from objective facts, and not from the lawyer’s belief (because this is subjective and harder to prove)

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The reasonable expectations of the client bear weight

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Lawyer’s files and notes that indicate how the lawyer has dealt with the client is useful.

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Aspects that affect a client’s reasonable expectations of a retainer include the capacity in which the lawyer acted, who instructed the lawyer, who is liable for the lawyer’s charges and whether a contractual relationship existed with the claimant in the past.

Pegrum v Fatharly 

W wished to borrow money from the appellants. To save cost, W proposed that the respondent, who was retained as solicitor for W’s group of companies, prepare all the documents. The Appellants agreed. It was understood that the respondent would be the only solicitor involved in the dealing. Both parties attended on the respondent and supplied information to be put into the documents.

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The respondent prepared the documents and W paid the appellant’s cost for doing so. The respondent knew that W and his companies were a bad risk and that the securities given by them were inadequate to secure the loan but did not warn the appellants.

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When W was unable to pay the loan, and the securities had proven to be inadequate, the issue arose as to whether the respondent had acted as solicitor for the appellants.

Held: a solicitor-client relationship existed between the respondent and the appellants. 

Although the respondent was being paid a monthly fee by W and had acted for W in the past, this did not mean that the respondent was exclusively W’s solicitor.

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The arrangement between the parties as to the payment of the solicitor’s work is seldom relevant to the issue of whom the work was done for and whom professional duties are owed.

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The respondent should therefore have disclosed details regarding W’s financial position and failure to do so made him liable for the appellant’s loss.

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Where two parties consult the same solicitor, and if the solicitor does not show any indication that he will not act for one party, that is a strong indication that he is agreeing to act for both parties and will undertake the same professional responsibilities for both parties.

a clear statement is needed from the lawyer that he seeks to act for one party only and must be supported by documented advice or written communication.

Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 5 Note: The person or the client who argued for the existence of an implied retainer had his or her own lawyer. * cf tortious duty of care 

direct access to counsel

Barristers’ Rules, r 22 

implied retainer

Pegrum v Fatharly (1996) 14 WAR 92 Meerkin & Apel v Rossett Pty Ltd [1998] 4 VR 5 

written and oral retainers:

Authority of lawyers under the retainer Lawyer as agent 

the lawyer client relationship is one of agency

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however, not every aspect of the retainer will be that of agency.

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The scope of the retainer will define the scope of agency

Forms of authority: 

Actual

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Ostensible

Actual Authority 

Defined as a “legal relationship between principal and agent created by a consensual agreement to which they alone are parties”.

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Scope of actual authority ascertained by applying the ordinary principles of construction of contracts: o

Referring to the express words used, any trade usages, and the course of dealings between the parties.

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An agent can exercise both express actual authority (that conferred by the agency agreement) and those implicit in their position (implied actual authority)

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Any action taken by the agent within that scope of actual authority, whether express or implied binds the principal.

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The lawyer does not need prior permission as the retainer will have expressly authorised the lawyer to engage in certain actions

Ostensible Authority 

This occurs where the agent appears to have authority that he or she lacks, usually because the principal holds the agent out as being authorised to act in a certain position.

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In such a scenario, the principal is bound to third parties by acts done by the agent utilising its ostensible authority

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The third party can utilise estoppel to hold the principal to the agent’s actions

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The principal has a cause of action for breach of contract against the agent

Lawyer’s actual authority (express/implied) Implied authority to incur costs and disbursements 

A lawyer has implied authority to incur ordinary disbursements such as service fees, filing fees and so on.

Implied authority to receive money on a client’s behalf 

A lawyer who acts in a transaction under which a client is to receive money from a third party may have implied authority to accept a bank cheque or cleared funds for this purpose

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This does not include implied authority to accept payments other than in legal tender

No general implied authority to institute proceedings 

If you have been engaged for conveyancing, and if the vendor does not follow through, there is no implied authority to institute proceedings.

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This is different where a client confers on the lawyer actual authority to institute suits generally. But express authority to institute proceedings does not carry with it an implied authority to appeal.

No general implied authority to contract 

A lawyer has no general implied authority to make contracts on behalf of a client.

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Pianta v National Finance & Trustees Ltd o

The vendors of land retained a solicitor to settle written terms of land

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Held: this impliedly authorised the solicitor to negotiate and agree with the respondent’s representatives as to the terms the respondent would accept, and to advise his clients as to these matters.

o

But it did not authorise the solicitor to contract to sell the land on his client’s behalf.

o

And, save with express authority, did it give the lawyer authority to agree to a variation of a client’s contract.

No general implied authority to receive notices 

The fact that a client might be accustomed to retain the services of a particular solicitor or a firm of solicitor s in matters of a particular type does not constitute that solicitor or that firm of solicitors the client’s standing agent to receive notice of material facts

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IVI Pty Ltd v Baycrown Pty Ltd o

The vendor of land purported to revoke its offer to sell by a communication to a firm of solicitors nominated in the contract as the buyer’s solicitor. The buyer had faxed its acceptance before receiving notice of the revocation, but after the notification to the solicitors in question.

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The renovation was held to be ineffective.

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If there had been a chain of communication passing between the solicitors acting upon instructions for each party, there would have been no doubt as to the solicitors’ authority who has been instructed to conduct the negotiations.

Implied authority to compromise 

A solicitor has implied authority to compromise on such terms as he or she thinks best for the client unless the client gives clear instructions restricting that authority.

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Waugh v HB Clifford and Sons Ltd o

It is perfectly clear that the defendant's solicitor has ostensible authority to compromise on behalf of his client, not-withstanding the large sum involved. It is not incumbent on the plaintiff to seek the signature of the defendant, if an individual, or the seal of the defendant if a corporation, or the signature of a director.

o

But it does not follow that the defendant's solicitor would have implied authority to agree damages on that scale without the agreement of his client. In the light of the solicitor's knowledge of his client's cash position it might be quite unreasonable and indeed grossly negligent for the solicitor to commit his client to such a burden without first inquiring if it were acceptable. But that does not affect the ostensible authority of the solicitor to compromise, so as to place the plaintiff at risk if he fails to satisfy himself that the defendant's solicitor has sought the agreement of his client.

Lawyer’s ostensible authority Ostensible Authority to act as “medium of communication” 

A client who has previously authorised lawyers to make offers and other communications on their behalf may be held to hold out the lawyers as the medium of communication.

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But it is unlikely that nominating a lawyer to act in the event that a contract is concluded holds out the lawyer as a medium in respect of communications in respect of pre-contractual negotiations.

Ostensible authority to compromise 

Case law indicates that a lawyer retained in an action has an ostensible authority, as between lawyer and the opposing litigant to compromise the suit without actual proof of authority, if the compromise does not involve matters collateral to the action. (Waugh v HB Clifford and Sons Ltd). o

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Compromise that exceeds lawyer’s actual but not ostensible authority binds the client. o

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Grounded in practical concerns: requiring proof of actual authority when most compromises are made in court or in counsel’s chambers would obstruct litigation.

The client has recourse against the lawyer for acting beyond his or her authority

Client may invite court to exercise its discretion to set aside the compromise on the ground that to allow it to stand would involve grave injustice. o

Broadbent v Medical Board of Queensland: if the courts are too willing to disregard compromises made in litigation by the parties’ lawyers, the aim of promoting the settlement of compromises will be hindered.

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Resources will also be wasted on investigating disputes between client and lawyer who should be able to prove whether or not a particular compromise reflected the client’s instructions.

Court’s discretion will be exercised where the compromise was made by way of mistake. The court is concerned with the justice of allowing the compromise to stand.

Lawyer’s acceptance of work Counsel’s duty to accept a brief- cab rank principle Lawyers who practise solely as barristers are professionally bound to accept a brief in any court in which they practise: the cab rank principle. Barristers’ Rule 15: A barrister must accept a brief from a solicitor to appear before a court in a field in which the barrister practises or professes to practise if: (a) the brief is within the barrister’s capacity, skill and experience, (b) the barrister would be available to work as a barrister when the brief would require the barrister to appear or to prepare, and the barrister is not already committed to other professional or personal engagements which may, as a real possibility, prevent the barrister from being able to advance a client’s interests to the best of the barrister’s skill and diligence, (c) the fee offered on the brief is acceptable to the barrister, and (d) the barrister is not obliged or permitted to refuse the brief under rule 101, 103, 104 or 105. The Cab Rank principle does not apply when a lawyer acts as both barrister and solicitor. Grounds upon which counsel must or may decline a brief Independence and disinterestedness 

Australian Bar Association’s 2011 Barrister’s Rule: barristers cannot accept briefs where the client’s interest in the matter is or would be in conflict with the barrister’s own interest or the interest of an associate.

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Tasmanian and Victorian barrister’ rules: acceptance of briefs are not allowed if it would compromise the barrister’s independence, involve the barrister in a conflict of interest or otherwise be detrimental to the administration of justice.

Counsel must decline a brief:  Where counsel has information confidential to any person with different interests from those of the prospective client that may, as a real possibility, be helpful to the prospective client’s case, if the party entitled to the confidentiality has not consented to counsel using the information in the case  Where the barrister has already advised or drawn pleadings for another party to the matter  Where barrister has already discussed in any detail with another party with an adverse interest in the matter the facts out of which the matter arises  Involving appearance in a contested hearing before counsel’s parent, sibling, spouse, child or a member of counsel’s household, or before a bench of which such a person is a member  Representing a party to an arbitration in any proceedings arising out of the arbitration if counsel has advised the arbitrator in relation to the arbitration

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In which counsel has reasonable grounds to believe that he or she may, as a real possibility, be called as a witness, or which is an appeal from any decision, determination or award given after a hearing in which counsel was a witness Regarding which counsel knows, or ought to know that her or his personal or professional conduct may be called in question Regarding the assessment of costs of counsel’s briefing solicitor that includes a dispute as to the propriety of counsel’s fee or concerns the recovery from a former client of costs in relation to a case in which counsel appeared for the client In which counsel has a financial interest in the outcome, apart from a fee under a condition...