Should conveyancing solicitors act for both parties?

Posted on October 24, 2018 by | 0 Comments

Tim O'Dwyer M.A., LL.B OPINION
by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

Real Estate Encyclopedia

 

The simple answer to the above question is no. But I guess many of us will, from time to time, act for both parties in conveyancing transactions. And, frankly, many of us will continue to do so until the governments in our various states and territories legislate against this practice to properly protect conveyancing consumers. Our professional and industry bodies may skirt around the edges with cautious codes of conduct, but sooner or later, the law makers will have to step in and outlaw what we collectively can’t or won’t.

In the meantime, our indemnity insurers insurers may, by various persuasive ways and means, more effectively bring about the end of this lucrative but risky practice long before it becomes illegal.

There will be many times when you should refuse referrals from sources such as real estate agents, other conveyancers and solicitors, and old clients because of actual or potential conflicts of interests. No solicitor (or conveyancer) can be independent if he or she is recommended in that way, particularly if the referral comes from the real estate agent.

Our clients should expect to receive an impartial and independent conveyancing service untainted by conflicting allegiances, loyalties or interests on our part. When our own interests are involved we simply cannot have the required independence to act in the client’s best interests.

We are sometimes asked to act in circumstances where we hold another client’s relevant confidential information. If we decide to act for a new client this creates a conflict between our duty of confidentiality to the former client and our duty of full disclosure to the new client. In this situation there is a conflict of duties, rather than of interests, but clearly the protection of client confidentiality should be paramount.

In these situations it is clear the conveyancer or solicitor must cease to act for both or at least one client.

The rules across Australia generally seem intended to contain the risk of a conflict by limiting the circumstances in which we may act for both parties, requiring both to consent in writing, and provided no conflict of interests exists or arises.

The rules seem to try to strike a balance between the need for: the impartial and independent representation of clients, untainted by conflict; access for clients to the conveyancer or solicitor of their choice; and avoiding the expense, delay and inconvenience caused by unnecessary duplication of representation.

The general principle should instead be that a conveyancer or solicitor must not act for two or more clients where there is a conflict of interests or a significant risk of conflict. Allowing conveyancers or solicitors to act for both parties may be seen as a lowering of standards and a willingness to put our own interests before those of our clients. It might further damage our collective reputation in the eyes of government and the general public.

Instructions to act for both parties must be simply refused if a conflict already exists. We should also stop acting for at least one client if a conflict occurs during the course of a transaction. Unfortunately, a conflict may not arise, or become apparent, until the transaction is well underway. It can be expensive and inconvenient for a client to have to instruct a new conveyancer or solicitor part-way through a transaction. There may also be serious consequences for the client if the transaction is delayed.

My view is that we should not, however, charge (other than for disbursements) if we cease to act once a conflict of interests arises. The lack of a fee should ameliorate the additional expense of having to instruct a new conveyancer.

A modern, just society, it has been said, needs a legal profession which adopts high standards of integrity and professionalism. As a solicitor, I serve both clients and society. In serving society, I uphold the rule of law and the proper administration of justice. In serving clients, I work in partnership, making the client’s business my first concern. And conveyancers, you may well argue, are no different.

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