Regulation of Relationships with Lay Third Parties

A. Barristers

Some of the fundamental principles appearing at the start of the Bar Code potentially support a duty to third parties. Traditionally, these principles prohibit behaviour that is dishonest or otherwise discreditable to a barrister, prejudicial to the administration of justice or likely to diminish public confidence in the legal profession or the admin­istration of justice or otherwise bring the legal profession into disrepute.⁷¹

The Bar Code of Conduct itself has no particular focus on lay third parties.

In the new Bar Code of Conduct third parties are not mentioned in the core duties. Some core duties could affect dealings with third parties, but these are at a high level of generality. For example, acting with honesty and integrity,⁷² or behaving so as not to diminish public trust and confidence in the profession⁷³ cover conduct towards third parties. It is not clear, however, what specific obligations they are owed. This also applies to the rules in Chapter 2: ‘Behaving Ethically’.

One of the rules in Chapter 2, which provides that barristers should not knowingly, or recklessly, mislead, or attempt to mislead, anyone, imposes an obvious constraint on dealings with third parties.⁷⁴ This appears to be quite an onerous duty, yet it is not clear precisely what is intended. Not misleading is not quite a duty of candour, being open or transparent, but it is quite close. It is consistent with the duty to the court, but would be a considerable constraint in negotiation.

⁷¹ BSB, Bar Code of Conduct 2004, 8th edn, at para 301.

⁷² BSB, Handbook 2014, Code of Conduct, CD3.

⁷³ ibid, CD5.

⁷⁴ ibid, r C9.1.

B. Solicitors

i. A Brief History of the Regulation of Duties to Third Parties

a. The Evolution of Regulation of Third Parties

The Solicitors’ Practice Rules 1990 contained no explicit reference to any duty to lay third parties. The nearest that Rule 1, the basic principles, came to such a notion lay in not harming the good repute of the solicitor or of the solicitors’ profession and upholding the solicitor’s duty to the court. This was not true of the Guide, the 1999 version of which included a wide duty to third parties.

The main principle of Chapter 17 of the Guide, relationships with third parties, provided that ‘[s]olicitors must not act, whether in their professional capacity or other­wise, towards anyone in a way which is fraudulent, deceitful or otherwise contrary to their position as solicitors. Nor must solicitors take unfair advantage either for them­selves or another person’.^[2092] Of course everyone, including solicitors, has an obligation not to deceive or defraud as such acts are contrary to the law.

If solicitors could be said to be subject to professional ethical constraints as a result of Principle 17 they flowed from the obligation not to take ‘unfair advantage’. Not much guidance was given on this, although, in context, the main focus was unrepre­sented parties. The 1999 Guide also told solicitors that they must not write ‘offensive letters’ to third parties, or behave offensively.^[2093] Good manners are required however appalling the solicitor or his client considers the other side to be.

The remainder of the chapter on third parties in the 1999 Guide was largely a ragbag of prohibitions without much guiding rationale.

Apart from the reference to unfairness in Rule 17.01, the 1999 Guide contained one other paragraph hinting at a more expansive notion of responsibility to third parties. This was that ‘[w]hen writing a letter of claim, a solicitor must not demand anything other than that recoverable under the due process of law’.^[2097] The example given was of a solicitor sending a letter of claim for a simple debt and demanding the cost of the letter of claim. This, it was said, would be improper because it could not be known at that stage whether such a cost would be legally recoverable.^[2098] An interesting feature of this paragraph was that, although the Guide did not claim the status of rules, the formulation (‘must not claim’) was the language of a rule.

Although not writing misleading letters was a clear example of being fair to third parties, the provision of only one example suggested a very narrow compass. The creation of wasted costs orders had already imposed potential responsibility for improper and unreasonable conduct in litigation. The decision to limit prohibited unfair conduct to letters before action presumably represented a deliberate decision not to follow the law. This implied that, as far as the Law Society was concerned, solic­itors could indulge in ‘improper and unreasonable conduct’ provided they paid for it.

b. The Solicitors’ Code of Conduct 2007

The principle relating to third parties was simplified in the Solicitors’ Code of Conduct 2007, which omitted the prohibition of fraud and simply provided that ‘[s] olicitors must not use their position to take unfair advantage of anyone either for [their] own benefit or for another person’s benefit’.^[2099] Despite the devotion of a chapter to third party obligations the constituent rules did not really take substantive obliga­tions to third parties much further.

The guidance to the chapter was more expansive on the scope of third party duties. For example, it suggested that the duty not to take unfair advantage applied when a solicitor was involved in a road accident. It was considered a breach of the rule if the solicitor used his position ‘unfairly to harass or intimidate the other motorist’.^[2100] This made it clear that the duty not to take unfair advantage applied beyond the workplace.

The 2007 Rules also contained a rule prohibiting letters which made claims that they knew were ‘not recoverable through the proper legal process’ and repeated the example of sending a letter of claim for a simple debt claiming costs.^[2101] This, it was said, would breach Rule 10. This guidance was a potential foundation for a rule that solicitors should not use the authority of the solicitor’s role to try to intimidate or pressurise the other side to concede illegitimately. Again, however, the decision to continue to limit the principle to a single example may be significant.

The second piece of guidance to Rule 10, which was new, developed the idea of obligations owed to third parties. It advised that particular care needed to be taken when dealing with unrepresented parties to ‘find a balance between fulfilling your obligations to your client and not taking unfair advantage of another person’. The guidance went on to recognise that ‘this limits your duty to act in the best interests of your client’.^[2102] The guidance was sparse in describing the degree of limitation envisaged.

The guidance to Rule 10 gave an example of a situation where an unrepresented opponent produces badly drawn documentation. It went on to suggest, rather unhelp­fully, that the solicitor should ‘suggest the opponent finds legal representation’. It went on to consider the situation where the opponent did not do so and suggested, even more unhelpfully, that the solicitor would then ‘need to ensure that a balance is maintained between doing your best for the client and not taking unfair advantage of the opponent’s lack of legal knowledge and drafting skills’.^[2103]

The idea of ‘balancing’ is the nearest that the guidance came to defining a spe­cific obligation to third parties.

The generally conservative approach to recognising responsibilities to third parties was maintained throughout the rules and guidance to Chapter 10 in the 2007 Code. The guidance continued with a number of obvious examples. Solicitors should not, for example, receive or keep documents subject to an express condition if they are either unable or unwilling to abide by that condition.^[2105] The guidance also noted that so to do would ‘diminish the trust the public places in you or the profession’, contrary to Core Duty 1.06. More significantly, solicitors were under no obligation to refuse representation to a client with a hopeless case. Such cases expose the opponent to a level of cost and risk that might be considered ‘unfair’.

The Solicitors’ Code of Conduct 2007 provided some advice on dealing with cases where it may be necessary to breach client confidentiality by disclosing expert reports affecting children. The supplement to the Code reminded solicitors of their duty to reveal expert reports commissioned for the purposes of proceedings to other parties and to tribunals. They were reminded that the position in relation to voluntary disclosure of other documents or communications between solicitors and clients was uncertain and that advocates were under a duty not to mislead the court. Consequently, solicitors were advised, as advocates with knowledge adverse to the client’s case, to seek the client’s agreement for full voluntary disclosure. This was said to be for three reasons:

1. the matters the client wants to hide will probably emerge anyway;

2.

3. if the information is not voluntarily disclosed, you may be severely criticised by the court. The advice continued ‘[i]f the client refuses to give you authority to disclose the relevant information, you are entitled to refuse to continue to act for the client if to do so will place you in breach of your obligations to the court’.^[2106]

This reasoning, while possibly quite correct, revealed as much concern for the solicitor’s interests as the client’s. It revealed no concern whatever for third party interests.

c. The SRA Handbook

The SRA Handbook added nothing to substantive obligations owed to lay third parties. The first of the four outcomes in Chapter 11, ‘Relations with Third Parties’, reflected the overarching duty not to take unfair advantage of third parties in either a professional or personal capacity.⁹⁰ The other three outcomes relate to very specific situations and only one relates to lay third parties. This is the obligation on solicitors acting for a seller of land to inform buyers immediately if the client intends to deal with more than one buyer.⁹¹ The other two outcomes, performing undertakings on time⁹² and properly administering oaths, affirmations or declarations,⁹³ are system­facing responsibilities.

The indicative behaviours for Chapter 11 replicate previous rules or guidance. They largely include system-facing responsibilities, for example, providing sufficient time and information to agree costs,⁹⁴ returning documents or money held subject to a condition that is not met⁹⁵ or on demand where held to the sender’s order.⁹⁶ They also include one ambiguous, negative indicative behaviour: taking unfair advantage of a public office held by solicitors, members of their firm or by their families.⁹⁷ The implication of including this in Chapter 11 is that the unfair advantage taken is at the expense of an identifiable third party.

As in previous iterations of rules and guidance, indicative behaviours suggesting obligations to third parties tend to be confined to very specific situations. Therefore, solicitors are unwise to communicate with represented parties, except to get details of their lawyer, unless the other lawyer consents or in exceptional circumstances.⁹⁸ There are familiar restrictions on taking unfair advantage of an opposing party’s lack of legal knowledge where they have not instructed a lawyer⁹⁹ and on a solicitor demand­ing anything for himself, or for a client, that is not legally recoverable.¹⁰⁰

VII.