One would normally expect a solicitor whose role it is to provide a service to their client to advise on legal matters upon which they are instructed and explain clearly any implications or risks involved. However, to what extent should a solicitor explain matters?
Generally, the scope of a solicitor’s duties is contained in the instructions given by the client as set out in the retainer letter. The retainer letter limits the scope of the duty of care.
Case law would suggest that the extent of the duty to explain matters is very much dependant upon the client’s own experience and background. As such it would not be expected for a solicitor to explain something that should be obvious to a client with the requisite experience and background of a particular business or transaction.
An inexperienced client or one dealing in matters that he has no experience may need more advice than one who is experienced. Where a solicitor gives an explanation it is open to him or her to tailor it to meet the client’s particular needs dependant on the client’s experience and background. He or she would fulfil the duty of care by giving an explanation in terms that the client reasonably appeared to understand, even if the client later claims not to have understood it.
Further, while a solicitor has the duty to advise of a risk in a transaction he or she generally has no duty to evaluate the risk unless instructed to do so or unless there is an established practice of obtaining certain information or carrying out particular searches in that type of transaction.
Recently, in the case of Kandola v Mirza Solicitors LLP the Court considered the solicitors duty to explain matters to a client. In this case the client was an experienced businessman who had used the firm of solicitors over many years for conveyancing transactions. Mr Kandola was buying a property and had agreed with the seller that he would release a 25% deposit directly and not through the usual procedure being that the deposit would be held by the sellers solicitor as stakeholder.
Mr Kandola was advised by his solicitor that this was risky and not to proceed on this basis. Mr Kandola wished to proceed regardless of the advice and the solicitor required him to sign a waiver stating that he accepted that he understood the advice given by his solicitor and the risks involved with the transaction. He did so and proceeded with the transaction. It transpired that before exchange of contracts a petition for bankruptcy had been presented against the seller who was subsequently declared bankrupt with the result that Mr Kandola lost his deposit.
Mr Kandola tried to argue in court that he had not been properly advised as to the risks of the transaction and that had he been properly advised the bankruptcy petition would have been disclosed and he would not have proceeded with the transaction had he been aware of this.
The Judge considered that the waiver was sufficient to demonstrate that he had been advised. The judge stated that “a solicitor’s duty to explain matters to their client (such as the risks involved in taking a particular step) takes account of his client’s experience; the solicitor is not required to explain matters that should be obvious to a person with the client’s experience or background”. Further, that a solicitors duty is “always defined by his retainer. If he advises his client of a risk, it is a matter for the client to decide whether to take that risk, or to obtain further information…before doing so. The solicitor is not, in general, obliged to seek out such further information unless instructed to do so”.
This article does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered.