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Ethics: Anticipating obligations

Ethics: Anticipating obligations

By Gino Dal Pont

Ethics Practice & Procedure 

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Lawyers’ obligations may emerge independent of an existing retainer.

Snapshot
  • As the lawyer-client relationship is constituted by contract, it is usual to assume that corresponding obligations are triggered by contract. 
  • While a common assumption, there are occasions where obligations in fiduciary law, tort law, confidentiality and statute can precede the retainer.
  • Lawyers should therefore be alert to the prospect of obligations that may emerge independent of an existing retainer.

That a lawyer-client relationship is created by way of contract – termed a retainer – has long been established. The terms of this contract, whether express or implied, serve to set the boundaries of authority conferred on the lawyer, ordinarily substantiate the lawyer’s entitlement to remuneration (often via an attendant costs agreement) as well as fundamentally to identify the client.

In this context, as in various other contractual relationships, the contract serves as the threshold through which other duties are attracted, namely duties super-imposed by fiduciary law, tort law, the law of confidentiality and under the auspices of statute. It is often assumed, to this end, that these obligations are triggered from the moment of entry into the retainer and, with the exception of confidentiality, expire once the retainer has come to an end. Yet, while perhaps a convenient rule of thumb, it is hardly one that can be stated categorically.

There are instances where, say, fiduciary law and confidentiality can infuse relations outside of an existing lawyer-client retainer. In the fiduciary sphere, by way of example, the New South Wales Court of Appeal in a 2019 decision ruled that a solicitor owed fiduciary obligations to a prospective client during negotiations for and steps taken to establish a retainer.1 Macfarlan JA, with whom Bathurst CJ and McCallum JA agreed, remarked that “fiduciary duties may, and ordinarily will, be owed in the course of negotiations for and steps taken to establish a fiduciary relationship”.2 This observation draws support from case law on putative partnerships and joint ventures.3 His Honour voiced concern that “[t]he salutary effect of fiduciary duties would be considerably diminished if soon-to-be fiduciaries could ignore conflicts of interest, or fail to disclose material facts, in the creation of their fiduciary relationships”.4

That fiduciary law can invade professional relations before any retainer agreement is effected suggests potential scope for tort and confidentiality obligations preceding or pending any such agreement. From a tort law perspective, the fact that the law is willing to countenance a duty of care owed to non-clients in a variety of scenarios, which are not closed,5 itself suggests a lack of temporal identity between contract and tort. 

So far as confidentiality is concerned, its tentacles are not confined to communications under the umbrella of a contractual relationship (or a fiduciary one); it can stem (in equity or under statute) independently of other legally recognised relations. Lawyers can in the course of their practice receive confidential information from a prospective client. For instance, a prospective client may consult multiple law practices in an effort to decide which to select to represent him or her in the matter (sometimes described as a beauty contest). This may involve the prospective client disclosing what may come under the veil of confidentiality, potentially sufficient to disqualify a practice that he or she did not select from subsequently acting in the matter. Professional rules in Victoria explicitly countenance this prospect, in defining “former client” to include a person who “provided confidential information to the solicitor, notwithstanding that the solicitor was not formally retained and did not render an account”.6

The now superseded Legal Profession Act 2004 likewise envisaged the prospect of lawyer obligations preceding entry into a retainer. It required that costs disclosure be “made in writing before, or as soon as practicable after, the law practice is retained in the matter”.7 While the current statutory equivalent speaks in terms of disclosure “when or as soon as practicable after instructions are initially given in a matter”,8 and thereby appears to temporally align the obligation with (or after) entry into a retainer, it might not always be easy to correlate costs disclosure with the giving of full instructions.

Ultimately, therefore, lawyers should not blindly proceed on the assumption that their professional obligations cannot antedate the retainer, but be alert to scenarios where a pre-existing obligation may arise. ■


Gino Dal Pont is Professor, Faculty of Law, University of Tasmania.

  1. Rahme v Benjamin & Khoury Pty Ltd [2019] NSWCA 211.
  2. Note 1 above, at [86].
  3. As observed in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 7–8 per Gibbs CJ, at 12 per Mason, Brennan and Deane JJ, at 16 per Dawson J. See, eg, Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R 1; Tuna Tasmania Pty Ltd v Allison [2003] TASSC 4.
  4. Note 1 above, at [90].
  5. See GE Dal Pont, Lawyers’ Professional Responsibility, 6th edn, Lawbook Co, 2017, pp 682–698.
  6. LPUL Australian Solicitors’ Conduct Rules 2015 (Vic) Glossary.
  7. Legal Profession Act 2004 (Vic) s3.4.11(1).
  8. LPUL (Vic) s 174(1)(a).

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