Legal Practice 101: ‘Who is my client?’
BY GLENDA CARRY – OCT 11, 2024 7:35 AM AEDT
Snapshot
- It is of crucial importance that solicitors remember to clarify at an early stage ‘who is my client’.
- A benefit of always entering into a retainer is that the question of ‘who is my client’ does not get overlooked.
- There is NSW precedent illustrating the risk in not considering this crucial question.
As solicitors, according to the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, one of our fundamental duties is to act in the best interests of (our) client. In order to do so we must first determine ‘who is my client?’
While it may seem rudimentary, ignoring this basic question can have significant consequences.
A common scenario
Take, for example, the common scenario where a solicitor, Nancy, has acted for a family for many years. Nancy’s longstanding clients, Rob and May, are wealthy business owners who own a number of properties. Rob and May have referred many friends and business associates to Nancy.
While discussing their future plans with Nancy, Rob and May tell her they want to transfer one of their properties to their son, Lachlan. Nancy has known Lachlan since he was a child and learns that Lachlan is now a budding entrepreneur. He plans to subdivide the property and build two houses on it. A few weeks later, Rob, May and Lachlan call in to see Nancy, instructing her to prepare the documents for the transfer. They have obtained a valuation for duty purposes. They tell Nancy they are going overseas for a week and will sign the documents when they return.
Nancy draws up the documents and a week later Rob, May and Lachlan drop by to sign the paperwork. The duty is paid and the transfer proceeds smoothly. However, a few months later Nancy receives a call from an irate Lachlan. Lachlan has just been told by his surveyor that an easement over the property prohibits any further development. He queries why Nancy never told him this. Nancy is taken aback and tells Lachlan she was not acting for him; she was acting for Rob and May. Lachlan is adamant that Nancy was also acting for him and had a duty to act in his best interests.
Nancy checks her file. It holds a hand-written note with details of the property, Lachlan’s full name, address and date of birth, Client Authorisation Forms from Rob, May and Lachlan, and a Transferee Declaration from Lachlan. Nancy realises there is no retainer on file and no evidence that she has considered on whose behalf she was acting, or discussed that question with Rob, May and Lachlan.
Nancy gets a bad feeling in the pit of her stomach and sits down to reflect on how this happened.
NSWCA consideration
The critical importance of determining ‘who is my client?’ also arose in the case of McFee v Reilly [2018] NSWCA 322. In that case, one of the issues before the NSW Court of Appeal was whose behalf the solicitor was acting on. In finding the solicitor was acting for both transferor and transferees in an intra-family transaction, the Court made reference (at [831) to an excerpt from the first instance judgement:
‘More probably, he [the solicitor] did not really turn his mind to the identity of his client, or clients, in any critical fashion. Incidental statements made by him in correspondence suggest that, without critical analysis or reflection, he regarded the [solicitor’s] firm as simply acting for “the [Reilly] family”’ (at [1731).
Risk management tips
Many solicitors find themselves acting for inter-generational families. In this, as in every scenario, the first question we need to ask ourselves is ‘who is my client?’
The answer to this question determines to whom we owe our duties and is also the basis for considering potential conflicts.
One of the benefits of always entering into a retainer (even where cost disclosure is not required) is that it focuses the mind on this fundamental question.
This article originally appeared on lsj.com.au