Solicitors’ Undertakings – An update - Guidance from the Law Society of England & Wales
Last July the Supreme Court handed down Judgment in the case of Harcus Sinclair LLP –v- Your Lawyers Limited. The Supreme Court examined the enforcement of solicitors' undertakings given by solicitors practising in incorporated law firms. The Court reached the view that it did not have jurisdiction over corporate identities providing legal services, such as LLPs or limited liability companies, which have a separate legal personality.
The Law Society of England & Wales has now provided guidance to those relying upon undertakings. It recommends against individual solicitors personally giving solicitor’s undertakings. This was the obvious solution to the issue highlighted in the Harcus Sinclair case.
The guidance notes that where an undertaking is expressed as a contract, the recipient can seek legal remedies, such as damages or specific performance, through the Court regardless of the type of firm or entity that entered into the contract. It notes however that in the absence of a contractual element, the Court has no inherent jurisdiction over a limited company or LLP that has given, and not honoured, an undertaking. This issue does not arise when the giver of a solicitor’s undertaking does so in the name of a solicitor or a solicitor’s partnership because neither of these businesses have a separate legal entity.
The guidance does note that consideration should be given to a limited company or LLP’s undertaking policy so as to who should give an undertaking, the wording of non-standard undertakings and training on the law, regulation and internal response to the issue.
The guidance note reminds law firms receiving an undertaking from a limited company or LLP of the implications of the Harcus Sinclair case and the possibility that the undertaking will not be enforceable under the Court’s inherent jurisdiction. It notes that consideration should be given as to whether an undertaking should refer expressly to consideration being provided in return for the undertaking or the use of a deed, so that they could be enforced contractually by the Court.
Undertakings remain the bedrock of our system of conveyancing and the recipient of an undertaking must be able to assume that once it had been given, it will be performed. The breach of an undertaking given by a solicitor damages public confidence in the profession. Most conveyancing undertakings are in a standard form. However, in light of the Harcus Sinclair decision, there is a gap in the Court’s inherent jurisdiction to supervise solicitors’ undertakings given by limited companies or LLPs. Until this has been rectified it is important to be alive to this particular issue when giving and receiving undertakings.
If you would like further information or have questions, please contact Timothy Cockram.
**This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.