BEWARE OF GIVING FREE ADVICE! (09/01/12)

There’s an old American proverb that ‘the best things in life are free’: this is true to a point. But when it comes to giving free advice, all professionals need to be wary – give the wrong advice and you could open yourself up to legal action, no matter what spirit the advice was given in.

A recent Court of Appeal decision involving a claim against a firm of solicitors highlights this problem to the full. The case - Padden v Bevan Ashford Solicitors [2011] – centred on the claimant, Mrs Padden, and an impromptu meeting between herself and a newly-qualified solicitor.

During the short meeting, the claimant explained that she had been asked to sign some documents by her husband's solicitor and he had told her that she must get independent legal advice before doing so – hence her visit to the solicitors.

The details of the case are quite complex (a full summary of the decision is below) but despite having lost her case in the High Court, the decision was overturned by the Court of Appeal that found that despite advising Mrs Padden against signing the forms, the solicitors had a duty of care to advise her properly.

The simple recommendation not to sign them did not fulfil their duty to her. If time was short, stated the judgment, then they should have advised Mrs Padden to make a further appointment to discuss matters more fully - and they did not do that.

The advice for all business professionals is be very careful about what you say to potential clients, no matter how innocuous it might seem: the consequences can be extremely damaging. It seems that the best things in life aren't free after all.

The details

According to the Court of Appeal judgment, Mrs Padden "visited the defendant's Tiverton branch and told a receptionist that she needed to see a solicitor urgently, not least because she needed to get back home to see her children.

She was then introduced to Rebecca Shinner, who, it transpires had only very recently qualified as a solicitor. Ms Shinner, who no longer works for the defendant, was described by the claimant as being 'very gentle' and 'young'.  The meeting which then ensued was short. 

The claimant's evidence was that it may only have lasted five minutes, although she also suggested that it may have been as long as 15 minutes. A significant, and possibly the main or even only, reason why it was so short is that the claimant wanted to get away to see her children."

During that visit Mrs Padden explained that she had been asked to sign some documents by her husband's solicitor and he had told her that she must get independent legal advice before doing so.  Mrs Padden explained the background to this request - her husband had stolen some money from a client of his and the documents would give the victim security over various assets (including the matrimonial home) so that the victim could ultimately be repaid and Mrs Padden's husband would not go to prison.  Mrs Padden felt it important for her children's sake that their father should not go to prison.

Ms Shinner's advice was blunt. Quoting from the judgment, "Ms Shinner advised the claimant not to proceed with the projected transaction. When the claimant made it clear that she was going to proceed, Ms Shinner said 'I hope your husband is worth it'. The claimant replied that it was the children she was concerned about, not her husband. At the end of this short meeting, Ms Shinner explained that the defendants' policy was that the first half-hour given over to a client was free of charge."

Subsequently a partner in the firm attended a further meeting involving Mrs Padden and her husband at which both of them signed various documents and the partner signed to certify that Mrs Padden had 'had the consequences of this deed and the obligations which it imposes on her explained by a solicitor/ legal executive' and that he was 'satisfied' that she 'understands the nature of this deed and its meaning and effect' and that 'to the best of [his] knowledge [she] has freely consented to it without undue influence or … in reliance upon any misrepresentation…'.

The firm never billed Mrs Padden for the work done or advice given.

Mrs Padden subsequently lost a lot of money as a result of signing the documents because the victim relied upon them to claim repayment of stolen monies.  Her husband was indeed prosecuted and went to prison. It transpired he had stolen from others as well (unknown to Mrs Padden at the time she signed the documents).

Mrs Padden subsequently sued the solicitors for negligence - notwithstanding that they had advised her not to sign and had made no charge for their work or advice. Her claim was thrown out by a High Court judge.

But the Court of Appeal ruled that the High Court judge had been wrong to throw the claim out and that there should be a fresh High Court hearing before a different judge.  The Court of Appeal ruled that the (undisputed) facts that no charge had been made and that Mrs Padden had been clearly advised not to go ahead were not sufficient to make her claim against the solicitors bound to fail.