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GAZT
I I
H
JANUARY/FEBRUARY IV77
DUBLIN SOLICITORS' BAR ASSOCIATION
As already reported in The Gazette, at the first half-
yearly meeting of the Association, held on the 5th April
1976, Mr. Charles Meredith read a paper on the subject
of Solicitors' Undertakings which the meeting
recommended should be offered to The Gazette for
publication.
The text of the Paper, slightly amended for visual
rather than verbal presentation, is set out below.
There is a further warning which may be passed on to
the profession as a whole, beyond that inherent in the
contents of the Paper; in direct consequence of his
industry in the preparation of his address, the writer was
co-opted to the Incorporated Law Society's Sub-
Committee on the whole question of Undertakings. Let
those who presume to air their views beware!
UNDERTAKINGS NOT TO BE UNDERTAKEN
LIGHTLY
You may not know the story - the, sadly, true story -
of The Three Solicitors. Unlike the Three Bears, who
were, one is led to believe, a family, or at least a related
group of Bears, the Three Solicitors had nothing in
common except their professional qualifications and,
possibly, the desire to secure a prospective piece of
lucrative conveyancing business.
The Three Solicitors gave three separate undertakings
to hold title documents in trust for three separate banks,
in three separate financing arrangements — the only small
snag being that the three separate solicitors all turned out
to be acting for the one client and there was only one
property the subject of the title documents referred to.
Fortunately for one of the three solicitors, the lucky
one did indeed hold the Title Deeds, but the other two
found themselves in positions of considerable discomfort,
especially as the client left the jurisdiction, with the
borrowed money in his pocket!
The story of the Three Solicitors is a salutory story -
and one which serves as a timely reminder of the risks
Solicitors run in giving Undertakings on their clients'
behalf without considering extremely carefully just what
they are doing.
The writer was recently involved in advising upon the
strength of a collection of paper writings held out by an
independent Merchant Bank to represent security for
advances amounting to approximately £1,000,000. These
turned out to be a motley collection of unperformed
Solicitors' Undertakings dating from the property boom
of 1973, given in every conceivable circumstance of
property utilisation. Guarantees by the directors of
private development companies and other miscellaneous
security documents - but mostly, regrettably, Solicitors'
Undertakings.
In at least one case, it appeared that the Solicitor
concerned had returned the title documents to his own
client, leaving himself open to the Bank on an
Undertaking securing an advance in excess of £50.000.
All this is a somewhat lengthy way of pointing out the
very obvious fact that Solicitors should never give
undertakings without very careful consideration; without
being absolutely certain that they can perform that
Undertaking; without ensuring continuously thai they
remain able to perform that Undertaking; and without
ensuring that their client is not in a position to discharge
the Solicitor from the case, leaving the Solicitor liable on
foot of a previous Undertaking given on the client's
behalf.
Broadly speaking, Solicitors' Undertakings fall into
three categories :-
First:
Those they give to other Solicitors in the course of
everyday practice — mostly in conveyancing
transactions;
Second:
Those they give to persons or bodies other than
other Solicitors — mostly Banks or other
providers of Finance;
Third:
Those they give in their capacity as Officers of
the Court — that is, in general terms, those they
give to the Court — and mostly relating to
litigation.
The same basic considerations apply to all three and it
should possibly be borne in mind that, in the case of
Undertakings given as Officers of the Court, a Solicitor is
actually liable to commital for breach of such an
Undertaking. A Solicitor failing to enter an appearance in
an action, in pursuance of a written Undertaking — a very
common situation — is liable to attachment. Fortunately,
the situation is seldom reached wherein such drastic
measures are necessary or resorted to, but it is worth
remembering that such remedies exist.
As between Solicitors themselves, usually in
conveyancing transactions, it is accepted — and probably
rightly so — that without such Undertakings and without
the mutual trust that makes such Undertakings possible, a
great many wheels would very rapidly cease to turn and
considerable hardship would result to a great many
unsuspecting and innocent clients. However, most
Solicitors have their Blacklists, and some have been
forced into the extreme position of refusing to accept any
Undertakings whatsoever. Most Solicitors content
themselves with being selective as to whose Undertakings
they will accept.
The Conveyancing Sub-Committee of the Dublin
Solicitors' Bar Association was interested to discover
recently that one of the country's leading Banking Groups
keeps all Solicitors' Undertakings it receives under the
personal eye of the Law Agent himself, who is believed to
have remarked that he has a whole filing cabinet drawer
full of what can only be called, at best, 'dubious'
undertakings, and who has told us that the Law Society is
now backing up the Bank to ensure that all Solicitors'
Undertakings arc performed. This is absolutely as it
should be, but no doubt a good many red faces will result.
The practical points to be made concerning
Undertakings are very few and the writer considers that
they can be reduccd to the following, applied in a general
fashion to all situations:-
First:-
Always ensure, before giving it, that the client's
clear authority to give the Undertaking has been
obtained. And it should be noted that a Solicitor
cannot hide behind an Undertaking expressed to be
given 'on behalf o f . . . ' the client. It has been judicially
decided that, such an Undertaking still binds the
Solicitor personally.
Second:-
Always ensure, before giving the Undertaking,
that the client's written Undertaking has been obtained
not to discharge the Solicitor's retainer in connection
with the matter in which the Undertaking is given.
Third:-
Always ensure, before giving the Undertaking,
either (a) that the Title documents or whatever may be