Solicitors’ undertakings carry risk

A recent NSW case provides an important reminder of the care that must be taken by legal practitioners when giving undertakings. Undertakings are usually strictly enforced and should not be given for matters outside a practitioner’s control.

Undertakings are a promise to do, or not to do, something on which the recipient is entitled to rely. Undertakings can be express or implied and as noted in the 2022 LIV Ethics Guideline on Undertakings, can be given by solicitors in the course of legal practice personally, by solicitors on behalf of a client or given by employees on behalf of a firm.

The Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (ASCR) provide that practitioners must honour and ensure timely performance of undertakings they give (ASCR 6.1) and must not seek from another practitioner an undertaking that would require the co-operation of a third party who is not a party to the undertaking (ASCR 6.2). Undertakings are usually strictly enforced and if breached, can give rise to serious consequences including disciplinary action. Courts may order the practitioner to compensate a person who suffers loss because of the breach. An aggrieved party may also have a civil cause of action against the practitioner in contract, tort or under statute for misleading and deceptive conduct.

In Council of the Law Society of New South Wales v Downey [2023] NSWCATOD 162 a practitioner was found guilty of professional misconduct and fined for breaching an undertaking to provide documents to another party that, at the time of making the undertaking, were not in the possession or control of the practitioner.

In this case, the practitioner acting for a vendor in relation to the sale of their property was asked to give an undertaking to the purchaser’s solicitor to provide an original lease for the property 72 hours after settlement. The practitioner said that he was unable to provide the lease within this time frame as it was currently “in the post” but would undertake to deliver it to the purchaser’s solicitor within seven days. Settlement took place in reliance on the undertaking, but the original lease was ultimately not provided. The Tribunal held that the practitioner should not have given the undertaking in circumstances where their ability to comply and deliver the lease — which was not in the solicitor’s possession at the time of giving the undertaking — was out of their control.

With this case in mind, here are some risk management tips to think about when considering making an undertaking.

Practitioners should only provide an undertaking if they have direct control over its execution. Don’t undertake to deliver a document to another party or file a document in court unless that document is in your possession. A court will be unsympathetic to excuses that an undertaking could not be fulfilled because circumstances were out of the practitioner’s control, or there was a change in circumstances that makes an undertaking impossible to complete.

The requirements of and the obligations imposed by the undertaking must be explicit and easily understood. There should be no room for uncertainty or ambiguity. The undertaking should contain clear objective statements that stipulate the who, what, where, when, and how of the promise.

Undertakings should be written, or at least confirmed in writing. The act of writing the undertaking can also assist in reflecting on the commitment and the specifics of what needs to be undertaken.

Practitioners should avoid giving an undertaking that a client will or will not do something as clients sometimes change their minds and their compliance is not within your control.

Don’t be lured into hasty or on the spot undertakings. Decisions made in a rush or under pressure can lack the proper scrutiny that is required for these important commitments.

Undertakings given by staff or one partner in a law firm can bind the firm. It is therefore critical every person in your firm needs to be clear about who is authorised to give undertakings and in which circumstance, and that the provision of undertakings is properly supervised.

Having a good understanding of the risks involved will assist you when making or accepting undertakings. The paramount questions to ask should always be: does this undertaking need to be made, is the obligation to be fulfilled clear, and is its fulfilment within the practitioner’s direct control. If the answers are yes, then a clear, concise, well-considered, written undertaking is what practitioners should be aiming for.

• Practitioners have a professional duty to comply with an undertaking and they are usually strictly enforced.
• Only matters within the actual control of the practitioner should be the subject of the undertaking.
• Avoid giving an undertaking on behalf of clients as you cannot control their compliance.

Further reading

LIV 2022 Ethical Guidelines on Undertakings

Gino Dal Pont, Lawyers' Professional Responsibility : Chapter 22 (undertakings) (Thomson Reuters, 7th edition, 2020).