Professional independence – can you spot when yours is at risk?

[Australasian Law Management Journal,Compliance & Risk Management,General Management,Strategy & Leadership] March 3, 2022

Following professional conduct rules may seem straight forward, but it’s easy for solicitors to miss the red flags which can jeopardise their career, writes Annette Beashel.

A solicitor has an obligation to retain professional independence when acting for a client and this ties into various other obligations under professional conduct rules.

It seems like a clear and unassuming concept which should be easy to follow. However, professional independence issues are probably one of the most underrated legal practice risks because we often don’t think about them and they can crop up in unexpected ways.

It’s likely you have been in such a situation without characterising it as an independence issue. Ever had a family member ask you for legal advice? Or had a client ask you to do a favour? You probably considered conflicts and maybe ethical issues, but you may have missed that both scenarios are essentially issues of independence.

Ways your independence may be impaired

Below are some examples of the most common ways your independence may be called into question:

  • A client gifts you an expensive watch for a job well done.
  • You’re approached by your cousin at a family dinner who asks a question about a boundary dispute with their neighbour.
  • The General Counsel you have worked with for many years asks you not to report to the board of the client on an aggressive litigation tactic they have proposed which you are not sure is in line with the values of the company client.
  • The client asks you to provide legal advice on how to circumvent the regulations in an overseas jurisdiction.
  • The client asks you to communicate through an instant messaging application, even though you know it’s not secure.
  • You have difficulty in saying ‘no’ to a client request for something that seems odd, such as billing disbursements on a matter which don’t relate to the matter you acted on.
  • The client asks you to act on their divorce proceedings as a favour, when it’s completely outside your area of expertise, with the promise they will instruct you on more work.
  • Becoming too friendly with a client.

Professional conduct requirements

There are several rules under the Australian Solicitors’ Conduct Rules which together form the obligation to retain professional independence.

One of the fundamental ethical duties of a solicitor is to avoid any compromise to their integrity and professional independence (Rule 4.1.4). This must be considered in conjunction with a solicitor’s paramount duty to the court and to the administration of justice (Rule 3.1); this applies even if you must act contrary to the client’s instructions because a solicitor must remain independent enough from the client to see when their actions may breach this overriding obligation.

A solicitor’s duty to act in the best interests of a client in any matter in which the solicitor represents the client (Rule 4.1.1) is also relevant. Arguably, you cannot act in the best interests of a client if you allow your independence to be impaired and acting in the best interests of a client does not equate to blindly following their instructions.

The concept of independence is also mentioned in Rule 17, where a solicitor is representing a client in a matter that is before the court. They must not act as the ‘mere mouthpiece’ of the client but must exercise their own judgment based on all of the facts and the instructions of the client.

In addition, a solicitor must not act for a client where they would have a personal conflict (Rule 12.1) which can cover a broad range of circumstances.

Ways to protect your professional independence

Be cognisant of red flags. These include: it doesn’t feel right; you wouldn’t be happy for your friends, your co-workers, peers or the regulator to know what you are doing; there is a family or friend connection to the client, or you have become very close to the person instructing you, particularly if it’s an employee of the actual client; or there is an urgency to the request where you feel rushed and unable to consider all the issues properly.

Define who your client is from the outset and in your engagement letter so that it’s clear to you to whom who you owe professional conduct obligations, which may be different than the person who is instructing you.

Where you have identified a red flag or issue, take a step back and always start from the position of recalling that you have an obligation to independently consider the request or issue, regardless of whether your client thinks it’s a great idea, and that your paramount obligation is to the court. There may be other issues involved such as conflicts or confidentiality, but the starting point is thinking about the issue from an independent standpoint.

Often, speaking to a trusted colleague will help to crystallise the issues.

How to handle the most common issues

1. Acceptance of a gift

This can impact your ability to remain independent if the matter is ongoing, if the gift is of high value or cash, or if it is being given for the purpose of influencing you in a certain way.

You need to consider the nature of the gift and whether you continue to represent the client. For example, a modest gift after the matter has ended may be fine. Any gift that is expensive or is disproportionate to the work that has been done should be respectfully returned to the client with a short explanation that you couldn’t accept such a gift. Depending on the size of your firm, you may also have an internal policy around bribery and corruption which can help guide you.

2. Acting for family or friends

Law Society guidance discourages solicitors from acting for family or friends and classifies this as a high-risk situation. There are obvious conflict issues which could arise from the close relationship, but professional independence can also easily be compromised in this situation (see QLS Guidance Note No.23 Acting for Family and Friends). A solicitor may also be inclined to advise on areas outside of their area of expertise as they feel obliged to help out, which attracts professional negligence risk.

3. A client asks for a favour

A solicitor must follow a client’s lawful, proper and competent instructions (Rule 8), however this is a tricky one as you must still exercise your own judgment while remaining independent. Often, when a favour is asked, it’s not the same as an instruction; it’s the client asking for something out of the ordinary, or which would benefit them. Don’t think about whether not doing it would make the client unhappy; think about whether it’s the appropriate thing to do in the circumstances and given your firm’s normal risk-management practices.

4. Relying too heavily on one client

Having a loyal client that’s happy with the legal services you provide is great. But where you rely too heavily on one client it may impair your independence because there is the perception that you may be less likely to decline a request for a favour given there is a bigger impact if you lose that client. Having a diversified client base helps to keep your ability to remain independent easier to navigate.

5. Becoming too close to a client

Business development and nurturing client relationships is a normal part of running a successful legal practice. However, ensure that you think about where you draw the line with respect to retaining a professional relationship with a client.

When it goes wrong

If you do breach your obligation to retain professional independence, you potentially may not be covered by your PI insurance, depending on the circumstances (see Zakka v Elias [2013] NSWCA 119, where a newly admitted solicitor felt pressured to act for a family member on a complex legal matter without her employer’s knowledge, which led to a professional negligence claim).

There may be disciplinary action commenced by your regulator for breach of professional conduct rules, loss of the client or fees, reputational damage and potentially breach of contract through breach of outside counsel guidelines depending on what you have agreed with the client.

Don’t underestimate the role of remaining independent

Ultimately, solicitors are providing services which are not just dependent on competence and experience, but also the development of personal relationships with clients. But as opposed to other service industries, the legal profession is regulated and cannot take the approach of the ‘client knows best’ or ‘go the extra mile’ to make the client happy without limitation. A solicitor must walk the tricky line between delivering great customer service but also remaining independent as an Officer of the Court, and that path will not always be clear or obvious.

Annette Beashel is Senior Risk Lawyer and Regional Risk Manager APAC (Australia) for Clyde & Co, and has 15 years’ experience in advising international law firms on internal legal and regulatory compliance risks, across Australia, Asia and the United Kingdom.