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Transferring files between solicitors
by Owen Binchy and Niall Casey*
The Professional Guidance Committee
of the Law Society is asked to consider
disputes under many headings.
However, the volume of disputes
relating to the transfer of files between
solicitors equals, if not.exceeds, the
volume of all other disputes taken
together. The Registrar's Committee
which is one of the regulatory
committees of the Society also receives
a similar volume of complaints in
respect of this issue directly from clients.
It is hoped that the joint publication by
both committees of this review of the
law and the issues of conduct which
arise when a file is transferred, and a
statement of good practice, will lessen
these disputes and problems
considerably and ensure that the
interests of the client, the first solicitor
and the second solicitor are fairly
balanced. This note reflects current
policy.
The guide to professional conduct of
solicitors in Ireland
was published in
1988. At clause 1.22, it was
recommended that on receipt of a proper
authority, and of an undertaking from
the second solicitor to discharge within a
reasonable time properly drawn costs
and outlays, the first solicitor should
hand over the files, papers and
documents of the client to the second
solicitor.
While most solicitors tried to comply
with this recommendation, its operation
was found in certain cases not to be fair
to the interests of the first solicitor. That
solicitor has a right to be paid
immediately for the work he has done.
As with any other business, a solicitor in
a firm decides the terms on which he
will do business. Many considerations,
not least the matter of cash flow, may
dictate that the solicitor seeks immediate
payment for work done.
The solicitor has a right at common law
to exercise a lien on files and other
documents until he is paid. This right
must be fully recognised.
Who funds legal services?
When a client instructs a solicitor, he is
entering into a contract for legal services
in return for payment. As with all
contracts for services, the client is liable
for the fees. As soon as a solicitor starts
work on any matter, fees become due.
The solicitor then has a choice as to
whether he funds the action in full - that
is, whether he allows a credit until the
conclusion of the case, or not. If he does
not wish to fund the action, he will seek
funds in advance. In the latter case, the
client may provide the funds from his
own resources or may ask a bank or
other lender to fund the matter.
Alternatively, the solicitor may agree to
fund the matter on an interim basis,
furnishing interim bills from time to
time as the matter progresses.
Unless he is agreeable to do so, there
is no reason why the first solicitor
should continue to fund a case after
the client has left that solicitor.
When a client leaves a solicitor, he loses
prosecution of the case and the control
which would enable him to progress the
matter. The second solicitor is taking the
benefit of his colleague's work.
When a file transfers to a second
solicitor, he in turn must decide who will
fund the matter. He may decide to fund
the matter fully himself by paying the
costs and outlay of the first solicitor and
also by awaiting payment of his own
fees and outlays until the conclusion of
the matter. If he does not wish to fund
the matter, the client will be required to
do so, and, again, may seek funds from a
bank or other lender.
If a solicitor is approached by a client
who wishes to transfer his business from
another solicitor, the solicitor
approached should carefully explain the
issue of the funding of the matter to the
client and explore whether the client is
in a position financially to transfer from
the first solicitor, so that the best
interests of the client are not prejudiced.
In other jurisdictions where
comprehensive legal aid schemes are in
place, the State is funding the fees of
both solicitors who thereby have
security for their fees. When a file is
transferred to a new solicitor, the only
issue in respect of fees is the transfer of
the Legal Aid Certificate.
THE LEGAL POSITION
The relationship of a client and a
solicitor may,
prima facie
, be
terminated at will. Merely calling an
authority to act irrevocable does not
make it so.
The relationship of a client and a
solicitor is the relationship of a principal
and an agent and its termination is
governed by law. This general principle
governs most situations where a client
seeks to determine a retainer.
Where the first solicitor has
undertaken a personal liability on
behalf of the client, for instance, if a
solicitor has given an undertaking, the
client cannot determine the retainer
without the first solicitor's consent.
The law provides that in circumstances
where an agent has undertaken a
personal liability on behalf of a
principal, the agent's authority is
irrevocable. However, the agent/solicitor
may decide to consent to the
determination of his retainer, subject to a
formal release of the undertaking by the
recipient of the undertaking.
In practice, before giving an
undertaking, most solicitors seek a
specific written irrevocable authority
from a client for the giving of the
undertaking itself. This authority is
given for the purposes of securing a
benefit to the client. There is a further
general principle which confirms that
such authorities are to be deemed
irrevocable.
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