Just a Bit of Free Advice

Quite a long time ago (when I was really Coventry Man) I wrote a piece Mind What You Say on the dangers of solicitors giving free advice. It was based on the case of Padden v Bevan Ashford, and involved advice being given to a wife in relation to the giving of a charge over the matrimonial home to secure her husband’s liabilities. The advice took 15 minute or so, it was basically correct (“don’t sign it”) and there was no charge made, but the solicitors were still liable, or at any rate potentially liable as this was an appeal before the final trial of the action.

In that case the Court of Appeal made clear that if a solicitor (or other professional) accepts instructions to do something then they have to do it properly, and the fact that there is no fee does not remove their liability if they get things wrong.

The point that I made was that it is vital for the solicitor to keep a good note of the advice given, in case a disgruntled client comes back complaining up to 6 years later, and you need to be able to prove what happened perhaps 8 years later, when the solicitor has seen hundreds of other clients and can’t remember this one.

Well, there has been another case of this sort  – Jenkins v JCP Solicitors Ltd, and a useful note on it from the procedural giant Gordon Exall – so I am coming back to the subject.

The brief relevant facts (and there are lots of issues, such as suing the wrong entity that I won’t deal with here) are that Mr J, The Chairman and a major shareholder of Swansea City AFC, went to JCP for initial, free, advice on his divorce in April 2011. He was told that because of his level of indebtedness he was unlikely to achieve a clean break settlement, and he should delay matters. Subsequently Swansea City achieved promotion to the Premier League, the value of their shares soared, and in 2016 his wife petitioned for divorce and achieved a settlement of £2.25m. He  claimed that if he had been advised to start divorce proceedings in 2011 he could have avoided this result, and the solicitors should have realised that his financial position was likely to improve and advised accordingly.

Again, this is a preliminary decision on an application to strike the claim out, so all is still to play for. However from what I can see in the report it was not even argued that the solicitors were not liable because the work was free. So they have at the very least been involved in hundreds of hours of non-chargable work in preparing their defence, even if it succeeds in the end. And (if J had not mistakenly sued the new JCP Ltd instead of the JCP LLP that gave the advice) they would have had to fight (in 2019/20) on the basis of the attendance note, such as it was, of a free interview given in 2011.

The advice to take away with this is clear:

  • all advice had to be professional. It can be short, and preliminary, but this has to be made clear at the time, and the client advised to come back for more detailed advice before initial comments are relied upon;
  • take a good note (preferably typed and copied to the client) of any advice given, and keep it in your filing system so that it can be found 6 years later if necesary, after the solicitor involved has left;
  • this is especially important if the client indicates that they aren’t going to take your advice;
  • try not to give off-the-cuff advice, especially out of the office. If you do, follow it up with an email or short letter summarising what you said and emphasising its initial nature;
  • be especially careful on the telephone;
  • and in articles on the internet (this is journalism, not advice – see the box opposite);

Some people won’t advise informally at all. This is however difficult in practice, and most lawyers are prepared to have an initial chat with potential clients for 10-15 minutes. But it is vital not to give hard advice when you don’t know many of the details, and often better to insist on a formal meeting, or at least an exchange of emails, for anything that is important, or likely to become so.

Doctors are famous for trying to avoid advising on ailments at parties, with good reason. Lawyers need to take care too. Clients often don’t appreciate how complicated some questions are, and how qualified any advice has to be, and don’t really listen if you tell them of the limitations of what you can say. So if you are telling them something that matters, you need to do it properly, and preferably for a fee. At the very least, this will make it clear to both of you that you are putting your name on the line, as well as helping pay the rent..

Advertisements

Mind What You Say

I feel sorry for Bevan Ashford (as was) the West Country solicitors.  One afternoon in 2003 their small Tiverton office was visited by a distraught wife asking for advice and she was seen by a newly qualified solicitor who I won’t name here for reasons that will become apparant.

It seems that the wife had been told by her husband, a financial consultant, that he was in serious trouble, had been accused of taking some £200,000 from a client, and that the only way to avoid being prosecuted was to charge their jointly owned house, and their shares,  in favour of the client. Otherwise she and the children would see him going to prison.

In order for the charge to be valid the wife would have to get independent legal advice, and this is what she wanted. She had been given a letter from the husband’s solicitors explaining the situation very briefly and saying that she needed to get advice right away. Hence the visit to Bevan Ashford.

The meeting was a very short one – possibly less than 15 minutes as the wife had to collect the children from school. The solicitor gave excellent advice: don’t sign or agree to anything, don’t go ahead, the husband isn’t worth it. However, the wife was deperate to go ahead and left saying she would do so. No charge was made for the interview.

So far so good. However, things then started going seriously wrong:

  • It would appear there was no attendance note. For a 15 minute meeting that was understandable but not very clever, and probably reflected the solicitor’s inexperience.
  • Bevan Ashford sent a fax to the husband’s solicitors saying the wife would be going ahead, “having taken advice from them as to the consequences”. In fact the consequences had hardly been discussed.
  • A few days later the wife had a meeting in Bevan Ashford’s larger Exeter office with an associate who witnessed her signature to the charge and other legal documents, and certified that she had “had the consequences of the deed explained to her by a solicitor… and understood its meaning and effect.”  The associate had (it appears) not explained this himself – he relied on the advice given in Tiverton. And he hadn’t seen a note of this because there wasn’t one. He didn’t notice that the amount covered had gone up from £200,000 to £860,000. And he didn’t raise a bill either.

The rest of the sorry tale is rather inevitable. The husband had not stolen £860,000 as he had said but more than £2,000,000 and was inevitably prosecuted and sent down for 6 years. The parties divorced. The victim enforced the mortgage and the house was sold. So the wife sued the solicitors.

Now when the case came on for trial in Bristol there was the first bit of good news for Bevan Ashford – the Judge stopped the trial on the first day after hearing the wife’s evidence and dismissed the claim, saying there was no case to answer.  The initial advice was all you would expect in a 15 minute free interview and if the wife had wanted more she should have come back later for a proper appointment.  And no advice was given at the Exeter meeting. So the case failed.

However the Court of Appeal had a different idea and in December 2011 they allowed the appeal and ordered a retrial before a different judge.  So they all go back and the matter continues. Because the defendants  did not get as far as giving evidence the conclusion had to be tentative on the facts, and there wasn’t enough to make a final decision. The cost of two trials and a visit to the CA won’t be cheap to whoever loses in the end.

The CA made some pretty obvious comments:

  • Once a solicitor accepts instructions they have to do a proper job, whether there’s a fee or not.
  • If a solicitor certifies that somebody understands a transaction then they either have to explain it themselves or be satisfied that somebody else has done so, and the Exeter associate seems to have done neither.
  • There is little point in just telling a client not to enter into a transaction. You have to explain why not, and what will happen if they do. And in this case it should only take a moment for a solicitor (although perhaps not a newly-qualified one) to see that if somebody has stolen as much as £200,000, let alone £860,000 (or £2m) then they are going to be prosecuted even if they give it back.  So it was a scheme that was doomed to failure , however much the wife loved her husband at the time, and if she had been told this she would probably not have gone ahead.
  • And if a solicitor can’t give a client adequate advice they mustn’t certify they have, or they take the consequences.

So the case goes back for a retrial, or negotiation. And what can we learn, in addition to the CA’s points?

  • That  newly qualified solicitors know a lot of law and little of life, and are dangerous (even if “very gentle, and young” as the wife described her here.)
  • And that independent advice of this sort is serious work that needs doing properly, and at a fee that reflects the risks.

But most of all, that it doesn’t matter what happened, what matters is what you can prove happened. If you make and keep a good note then it is still there 8 years later when the oral witnesses have forgotten everything. And although one must always tell the truth, do remember that Winston Churchill said that he would come out of the history of the war very favourably because he would write the history of the war, and there must be some of that in all of us.

The case is Padden v Bevan Ashford [2011] EWCA Civ 1616.