Being alert to the needs of the vulnerable

In every area of legal practice we must be alert – many of us more alert – to the risks of impaired capacity or undue influence (or both) when anyone purportedly instructs us. The need for vigilance is increased if someone other than the client is the initiator of a matter, particularly if they have a direct or indirect, or potential interest.

The risks are obvious where instructions relate to matters such as passing control of, or shares in, a family company to relatives; making gifts or other arrangements for tax planning purposes; acting as guarantor; making or revoking a will; making or revoking a power of attorney; and so on. The risks are greater where the initiator, or someone connected with the initiator, is a proposed donee, beneficiary, borrower, executor, attorney or similar.

On 13 February 2012, the Mental Welfare Commission for Scotland (“MWC”) published a report on an investigation into the case of Mr and Mrs D (“the D report”): see Journal, March 2012, 35. The report included a recommendation that the Law Society of Scotland should “update existing guidance for solicitors in respect of powers of attorney to take account of the changes in the AWI [Adults With Incapacity] Act”, to address situations where the process was initiated by a party other than the granter, as well as where there might be some question as to capacity, undue influence, or other vitiating factors; and emphasising “the different ethical considerations involved for the granter in delegating welfare as opposed to financial powers”.

However, it quickly became obvious that the issues identified by MWC were relevant to a much wider range of matters, and indeed potentially to any matter in which a solicitor might be instructed. Accordingly, the Society has prepared and now issued general “Vulnerable Clients Guidance”, and more specific guidance on continuing and welfare powers of attorney. Helpful comments received following circulation of earlier draft material to relevant CPD seminars have been taken into account. MWC were supportive throughout the preparation of the guidance, and attended a joint meeting of the Society’s Mental Health and Disability Committee and Professional Practice Committee. The finalised guidance was of course the responsibility of the Professional Practice Committee.

Past failings

The D report narrates multiple instances of statutory and other protections failing to safeguard Mr and Mrs D, a couple with mild learning disabilities, from the dominant, bullying and abusive conduct of Mr D’s brother, E, from 1997 onwards. In 2003 E instructed his own solicitor to prepare continuing and welfare powers of attorney in his favour by Mr and Mrs D. The solicitor was concerned about issues of capacity and wished Mr and Mrs D’s GP to certify, but met Mr and Mrs D only at the GP’s surgery on the day the documents were completed. MWC commented: “Although Mr D cannot read and Mrs D has limited reading skills, the couple signed the papers without the advice of their own choice of lawyer or independent advocate. They did not even know they were going to a meeting to sign the documents.”

Over the next six years the couple were subjected to repeated financial and other abuses by E until, in 2009, the powers of attorney were revoked.

Many practitioners who read the D report will have done so with a sense of déjà vu. The previous Society guidelines on powers of attorney (July 1998) narrated how MWC had investigated circumstances in which a solicitor set up a power of attorney without satisfying himself that the grantor had the necessary capacity, and gave the document to the family who obtained the signature of their elderly relative in hospital.

Minimising risk

In the new guidance, “vulnerable client” means a client or prospective client who may lack full capacity to instruct a solicitor, or to instruct and validly carry through a contemplated act or transaction, or who may be subject to undue influence or other factors which might vitiate that act or transaction. The guidance recognises that solicitors should balance the positive obligation to facilitate valid and competent acts and transactions against the negative obligation to avoid purported acts or transactions which are incompetent, void, or voidable.

It is unlikely that such guidance will guarantee that every solicitor will “get it right” in striking this balance, in every case. It is hoped that adherence to the guidance will very much reduce the risks, and at least eliminate cases where “getting it wrong” could reasonably have been avoided by following relevant rules, applying the guidance and proceeding with reasonable diligence.

The “Vulnerable Clients” guidance addresses the application of the Society’s practice rules in the context of vulnerability, such as the obligation to act in matters within the solicitor’s competency (rule B1.10), and to communicate effectively (B1.9.1 – meaning, of course, effective in relation to the client’s understanding) yet not to discriminate (B1.15.1), so that a reference to a colleague or other solicitor with relevant skills may be necessary. The obligation to act in the client’s best interests (B1.4.1) is considered in the context of apparently unwise instructions where there is capacity but possible undue influence. The question “Who is my client?” remains relevant, and is addressed. The examples of categories of situations and indicators, including in relation to “initiators”, with which those who attended recent seminars will be familiar, appear in finalised form.

The guidance concludes with the advice that where there is capacity and no undue influence, but there is illiteracy, communication difficulties, sensory impairments, other physical issues or frailty, the solicitor’s approach needs to be supportive, facilitative, well informed and careful.

The guidance on continuing and welfare powers of attorney addresses the process of taking instructions, including the matters which should normally be explained to the client; a checklist of matters on which instructions should normally be taken; the particular issues – and risks – regarding any powers of compulsion or restraint, including potential deprivation of liberty contrary to article 5 of the European Convention on Human Rights; and the need where relevant to explain the current position on the status of Scottish powers of attorney in England & Wales, and/or elsewhere. Guidance is also given on issues concerning certification and revocation. The 1998 guidelines are superseded.

It is not the purpose of guidance to state or interpret the law, and neither new set of guidance should be read as seeking to do so. The guidance does seek to include a description of good practice, wherever it uses the word “should”. Failure to comply might be taken into account in disciplinary or other proceedings. It is suggested that where a solicitor considers that particular circumstances justify departure from the guidance, a written record of the circumstances and reasons should be kept.

The Law Society of Scotland will be holding a launch event for the new guidance between 10am and noon on 1 August 2013 at the Society’s offices at 26 Drumsheugh Gardens, Edinburgh. Places are limited and will be issued on a first come, first served basis. To confirm your attendance, please contact rsvp@lawscot.org.uk