Solicitors warned on corporate undertakings risks
By Gazette Reporter >>
(21 July 2022)
New Law Society guidance has been published on how solicitors can best deal with the risks associated with accepting undertakings given by corporate entities such as companies and limited liability partnerships.
This issue was highlighted in Harcus Sinclair LLP v Your Lawyers Ltd where the Supreme Court noted that the courts do not have the same power to enforce undertakings against corporate entities as they do against individual solicitors.
In a practice note published today, the Society said that many practitioners mistakenly assumed that undertakings given by law firms set up as corporate entities could be enforced under the supervisory jurisdiction of the court – in the same way as an undertaking given by a solicitor, either personally, or on behalf of an unincorporated partnership.
However such entities, although not subject to the court’s inherent jurisdiction, are nonetheless bound by Solicitors Regulation Authority rules, the Society said. A breach of an undertaking could thus lead to a fine or other sanctions by the SRA or the Solicitors Disciplinary Tribunal.
Law Society president I. Stephanie Boyce said: ‘This is an important area for all solicitors, whether working in private practice, in-house or as freelance solicitors working for non-SRA authorised entities, not least because a breach of undertaking may be tantamount to professional misconduct.
‘Conveyancing and litigation solicitors should particularly take note, as these practices rely on the giving and receiving of undertakings.
‘This practice note not only provides guidance on how to proceed if one of the parties to a matter is represented by an LLP or a company, but also provides information about how best to mitigate the risks around accepting undertakings from such entities, and what other enforcement options may be available.
‘I strongly urge all our members to read this guidance, so they can comply with their professional obligations.’
(Courtesy: The Law Society Gazette)