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GAZETTE
MAY-JUNE
experience to date. The policy that will be issued will
guarentee continuity of insurance for three years.
Professional indemnity, like all other insurance, is a
contract of "uberrimae fidei", which means that not alone
must there be full disclosure in the initial application form
but upon renewal every year you must disclose to the
insurance company not alone claims that have been
notified to you but also claims, although not notified,
which may arise because of professional negligence. An
obvious example would be failure to issue a writ within
time. Although no claim may have been notified against
you, you are obliged to inform the company that a claim
may arise once you are aware of what has happened. In a
large office, at the time of renewal, a printed questionnaire
should be sent round to all qualified and unqualified
personnel dealing with clients' work, asking them the
relevant questions, and once the form has been signed by
each individual it should be returned to the partner in
charge.
If you take over a practice, or amalgamate with
another practice, it is very important that you ensure that
in both cases run-off insurance is continued for six years
from the date of the take-over or amalgamation. The
premium for this is substantially less than in the case of
the normal professional indemnity policy.
Solicitors' Accounts Regulations:
Your obligations under this heading will have been fully
covered in the lectures which you have received.
However, it is important to emphasise that the lack of
book-keeping in solicitors' offices in the past has been the
rock upon which many of our colleagues have perished. It
is penny wise and pound foolish not to have a proper
system of book-keeping in your office. It pays for itself,
and it is worthwhile before even installing a simple system
to take the professional advice of an accountant. If your
books are written up to date, if you carry out a regular
bank monthly reconciliation statement, and take out at
least quarterly accounts, your accountancy fee will be
much less than the fee that will be charged where the
accountant has to pay an articled clerk for three weeks to
do the preliminary work to try and bring the accounts
into some sort of shape, to enable him to issue the
Accountants' Certificate.
To be in breach of the Solicitors' Accounts Regulations
is a disciplinary matter. Every practising solicitor has six
months from the end of his financial year in which to file
his Accountants' Certificate. For reasonable cause some
extension has been allowed over and above this time in
the past. The Society is, however, entitled to refuse a
solicitor his practising certificate if his accountants'
certificate is not up-to-date, and refusal of a practising
certificate means that a solicitor can face prosecution for
acting as a solicitor without such certificate.
Undertakings:
These are the profession's shop window. Without the
solicitor's undertaking commercial life would become
extremely difficult, and delays would be enormous. Our
profession has been given the recognition and trust by the
financial institutions, Building Societies, Courts,
Government Departments and other bodies, which enables
us, by issuing an undertaking, to obtain valuable
concessions for our clients, without which it would be
impossible for us to operate efficiently. Therefore, it is
vital that not alone should we ever fail to perform on foot
of our undertaking but also that we should never be seen
to fail. If the day should come where because of a bad
track record in the performance of undertakings, the
facility of which I have spoken should be in any way
curtailed, we could not give our clients the service which
they expect, and then the standing of the profession would
be seriously undermined.
Therefore:
1. Never give an undertaking unless you have your
client's irrevocable authority to do so, and get this at
the start of the case.
2. Never give an undertaking unless you know that you
can perform it.
3. Never give an undertaking to pay a specific sum out of
the proceeds of sale. At the end of the day there may
be no proceeds. Always undertake to pay the
net
proceeds of sale.
4. Never undertake to do anything for anyone who is
not within this jurisdiction.
5. As a member of a firm, or as an assistant solicitor,
never give an undertaking unless in accordance with
the strict practice of the firm, and if you are an
assistant, unless with a partner's full authority.
6. Never undertake to pay a Government tax without
being absolutely sure how much is involved. For
example, an undertaking to pay Wealth Tax might
appear to be limited to some thousands of pounds on a
particular property. Remember, however, all the
taxpayer's liability under this heading is a charge on
each piece of his immovable property which is being
sold.
The reason why I say the undertaking should be
irrevocable is that unless it is so, if the client should
withdraw a retainer you could be in very serious trouble.
Remember, in most cases the property being sold is
subject to a mortgage, and that if you do get deeds up
from the loan society you do so upon accountable
receipt, and these deeds
must
be returned to the loan
society at their request. It the client changes his solicitor,
you will have no lien on deeds which you have obtained
from a lending institution.
The reason I say that an undertaking should always be
in respect of net proceeds of sale is that until the actual
day of closing you do not know what the net proceeds will
be. It is not sufficient to know that a vendor has sold a
property for 'X' pounds and that he owes his building
society 'Y' pounds, and that auctioneers' and solicitors'
fees and outlays will come to 'Z' pounds. On the day of
closing there may be 'A', 'B' and 'C' Judgment
Mortgages, which have come in since the contract has
been signed, which could well create a shortfall, leaving
you personally liable if you have undertaken to pay to
your clients's bankers 'D' pounds and you find yourself
now with 'D' minus £2,000.00.
Wills:
It is not necessary for me to attempt to go into the
intricacies of drawing up a Will. Hopefully you have
learnt this elsewhere. However, it is important to
emphasise that there should be no delay in attending a
person, particularly if they are in hospital or ill, to make
their Will. If you have any doubt about their testamentary
capacity do not make the Will unless you are assured by
their visiting doctor, or a doctor in the hospital, that in his
opinion the testator is lucid. Even then, in the first
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