This week’s free compliance webinar was all about solicitors undertakings. A topic which fundamentally underpins many legal services, but which is often taken for granted.
The webinar slides are available here and the recording is available via our COLP Insider newsletter. Sign up to the newsletter to receive invitations to these free sessions every month.
What is a solicitors undertaking?
Solicitors undertakings are rooted in common law, with solicitors being answerable to the Court under its inherent jurisdiction over Officers of the Court.
It is essentially a promise, some might say an commitment, given by a solicitor in their professional capacity.
See the recent Supreme Court case of Harcus Sinclair LLP (Respondent) v Your Lawyers Ltd (Appellant) [UKSC 2019/0098] for a detailed analysis of solicitors undertakings.
Solicitors undertakings are also a regulatory construct, defined in the latest SRA Code of Conduct as:
“a statement, given orally or in writing, whether or not it includes the word “undertake” or “undertaking”, to someone who reasonably places reliance on it, that you or a third party will do something or cause something to be done, or refrain from doing something”
The three constituent parts of an undertaking must be present, i.e.:
- A statement, given orally or in writing
- To somebody who reasonably places reliance on it (note that you do not have to intend for an undertaking to be given)
- That you or a third party will do something or cause something to be done, or refrain from doing something.
In the Harcus Sinclair case, the Court distinguished solicitors undertakings from non-binding promises. An enforceable undertaking will involve the type of work and action usually performed by solicitors in the course of their ordinary professional practice.
“I promise to mow the lawn” is not a solicitor’s undertaking (phew).
Enforcement
The importance of solicitors undertakings cannot be overstated. They underpin the entire conveyancing process – lenders would not release hundreds of thousands of pounds per transaction if there were any doubt that it would be properly used.
All parties to a legal matter can rely on the solicitor’s commitment, which of course is a fundamental reason for the existence of regulated lawyers.
There are potentially three ways that an undertaking can be enforced:
- Directly through the Courts – solicitors can be ordered to comply with an undertaking and/or pay damages to the other party. This only applies to individuals and unincorporated practices. The Court has no inherent jurisdiction over incorporated law firm entities.
- Indirectly through the SRA – a threat to report a solicitor (or firm) for non-performance of an undertaking is a powerful weapon. The SRA does not have the power to directly enforce the undertaking, but has the entire regulatory armoury at its disposal.
- Contract law – many undertakings are expressed as a contract, and can therefore be enforced in the usual ways. There is an argument to say that protecting a client’s interests may well involve ensuring that the contractual route is available. Note that a solicitor’s undertaking does not have to be a contract to be a valid undertaking for the other enforcement routes.
Don’t forget that an undertaking can potentially be enforced even if it is impossible for the solicitor to comply with it.
Tips for giving and receiving solicitors undertakings
- Have a clear policy and procedure on giving and receiving undertakings, including:
- Distinguishing low risk ‘standard’ undertakings (e.g. conveyancing)
- Who is authorised to give non-standard undertakings
- How to seek approval
- Obtaining client’s instructions
- Getting cleared funds on account
- Recording and monitoring undertakings.
- Are you absolutely certain that the performance of the undertaking is within your control? It might be worth a sense check by a colleague.
- Take great care when giving oral undertakings, and always make a contemporaneous note of the conversation.
- Do not agree to an undertaking that would put you in serious breach of the Accounts Rules by providing a pure banking facility. Any use of the client account must be related to a legal service. Law firms are not escrow agents.
- Train your staff on your policy and recognising the telltale signs of an undertaking. Don’t forget a document doesn’t need to be flagged as an undertaking for it to be valid.
- Don’t be pressurised into giving an undertaking or binding your client. Push back when necessary.
- If an undertaking contains a time commitment, treat it as a key date.
- Be specific – an undertaking should be SMART.
