Giving independent legal advice? Stop. Read this first.

Giving independent legal advice (ILA) can be risky. On average, four or five lawyers report to us each year because of ILA-related problems (examples below). Protect yourself. The material that follows will tell you how.

You may also find our tips for lawyers about to witness a signature helpful. You can find them here.

The risks

ILA is usually given to a client about to enter into some transaction or agreement. In BC, the most frequent requests for ILA relate to marriage and separation agreements, and mortgage loans and guarantees. The other party wants protection from challenges to the enforceability of the agreement based on your client’s claims of undue influence, or lack of understanding or capacity. You must ensure that your client understands fully the nature and consequences of entering into the transaction and is doing so voluntarily.

We know that giving ILA can be risky. The claims that lawyers usually report arise because the client is challenging a transaction in which he or she received little or no benefit, or was adversely impacted. A client may allege that he did not understand the document he was signing. Another may say that she signed only under duress or as a result of undue influence, or that she was never warned that the transaction was imprudent. Other times, the claim arises because of a misunderstanding between the lawyer and client about the scope of the lawyer’s retainer. When ILA is given on a matter that involves additional steps, the client may blame the lawyer if one is missed.

In many claims arising out of subsequent challenges to a transaction, the lawyer gave proper advice. However, our ability to prove that is compromised by the lack of adequate – or any – notes. Documenting your advice is critical. You are unlikely to have any independent recollection of a matter in which you met the client only once, and likely long ago.

How do you protect yourself?

First and foremost, use a checklist. It’s your starting point for ensuring that you meet your ILA obligations and of real benefit in later proving that you did. In fact, in a decision out of Ontario,1 the court found that the ILA lawyer’s use of a checklist and detailed notes helped establish that the client had signed a mortgage of her own free will and understood its nature and consequences. Cogent evidence of your proper ILA will help us deal quickly and effectively with any claim that arises.

What else can you do? Read this annotated copy of the Law Society’s ILA model checklist. It has LIF’s tips and suggestions added in to give you one stop shopping for your ILA risk management.

1 Webb v. Tomlinson 2006 CanLII 18192 (ON S.C.) 

Real-life scenarios from our claim files

A lawyer warned parents against giving a mortgage loan to their son. He told them that it was a terrible mortgage, but never confirmed that advice in a letter. When the parents later became incompetent, the Public Trustee questioned whether proper advice was given.

A client sought ILA in relation to the sale of his commercial fishing boat. He had received documents from the purchaser’s lawyer, and wanted to ensure that they accurately reflected the deal he had made. When he was later assessed GST on the sale, he blamed the lawyer for failing to advise him of the tax consequences.

The lawyer gave ILA on a separation agreement to a wife. The wife later said that the settlement was a bad deal for her and that she didn’t realize it was final.

A lawyer gave ILA to a property owner who apparently wanted to give his property to a friend. The client spoke only Korean and the friend offered to translate. The client later alleged that he did not understand what he was doing.

A wife signing a separation agreement understood she would be released as a co-guarantor on a mortgage. The agreement made no such provision.

A lawyer was asked by a friend at another law firm to give ILA in relation to a mortgage loan that he was giving to a young associate and her husband. She witnessed the couple’s signatures, assuming that everyone understood the deal. Apparently, the associate’s husband did not.

A lawyer gave ILA to an elderly client placing a second mortgage on her home. The mortgage funds were quickly lost in a fraudulent telemarketing scheme, and the client was declared incompetent shortly after.

A lawyer signed a certificate of ILA in relation to an 86-year-old man granting a $75,000 mortgage against his home. He wanted to lend the money to a virtual stranger, based only on her verbal promise to repay. She did not, and the mortgage went into default. With hindsight, that lawyer wished he had simply declined to act.

A client who received advice on a mortgage and guarantee given to a bank mistakenly thought that the guarantee was limited to the amount of the mortgage. In fact, it was an unlimited guarantee.

A lawyer provided ILA to a claimant granting a mortgage on property she owned to finance her husband’s real estate venture. The venture failed. The lender foreclosed and the claimant alleged she was unaware that foreclosure was a consequence of the mortgage.

Last updated: August 2017