Professional Undertakings – Guidance From The Law Society

Undertakings

An undertaking is a commitment by a solicitor to do or not do something. It can be enforced against the solicitor by the courts and failure to comply with an undertaking can also be professional misconduct leading to disciplinary action by the Solicitors Regulatory Authority (SRA).

Undertakings can be given by individual solicitors or a firm.

The recent case of Harcus Sinclair LLP v Your Lawyers Limited (2021) looked at whether an LLP could give a binding undertaking.

Harcus Sinclair LLP v Your Lawyers Limited (2021)

This was an appeal heard at the Supreme Court in March 2021 with judgment handed down in July 2021. It arose from a dispute between two firms as to who could act for group claimants in the substantial litigation concerning emissions from Volkswagen vehicles.

The question the court had to decide was whether a non-compete undertaking was unenforceable as an unreasonable restraint of trade and related to this whether the undertaking was a solicitor’s undertaking enforceable against the individual solicitor and also against the LLP law firm.

The starting point is to note that a court’s supervisory jurisdiction to enforce solicitors’ undertakings arises from their inherent jurisdiction over solicitors as ‘officers of the court’.

Undertakings given by solicitors must be done so in their ‘capacity as solicitors’.

In deciding whether an undertaking is enforceable by the courts, there are two relevant questions:

• The first concerns the subject matter of the undertaking and whether what the undertaking requires the solicitor to do (or not to do) is something which solicitors regularly carry out (or refrain from doing) as part of their ordinary professional practice.
• The second concerns the reason for the giving of the undertaking and the extent to which the cause or matter to which it relates involves the sort of work which solicitors regularly carry out as part of their ordinary professional practice.
• If both questions are answered affirmatively then the undertaking is likely to be a solicitor’s undertaking

It was made clear that:

Incorporated law firms authorised to provide solicitor services are not officers of the court. This is both because the authorising legislation has not made them so, and because the court has yet to recognise any incorporated body as one of its officers, confining itself to the recognition of individuals, whether they be solicitors, liquidators, bailiffs, receivers or sequestrators.

The critical difference where the undertaking is given on behalf of a solicitors’ LLP (or a limited company) is that it binds only the separate legal person constituted by the LLP, not its solicitor members. Mr Parker was signing the NDA as an agent and so there was no personal liability against him.

The Supreme Court declined to extend jurisdiction of the court over incorporated entities because it felt:

a properly informed decision would much better be made with the assistance of submissions from the Law Society, and from any other professional or regulatory body with a legitimate interest such as, for example, the Council of Licensed Conveyancers or the Solicitors’ Regulation Authority…this question is probably better dealt with by legislation than by the courts, because of the availability of procedures for consultation which the court lacks.

Law Society Guidance

In light of this case, the Law Society published guidance (Professional Undertakings) on 21 July 2022.

The guidance consolidates the case law in stating that a court’s supervisory jurisdiction in respect to enforcement of undertakings does not extend to limited company law firms or LLPs.

The only recourse in those situations are to:

1. Report the breach as a matter of possible professional misconduct to the Sra
2. Issue a claim for specific performance and/or damages if the undertaking is given under deed so enforceable as a contract

The SRA Principles applicable to the issue of undertakings are that you must act:

• “in a way that upholds the constitutional principle of the rule of law, and the proper administration of justice” – for example, when you give an undertaking to the court
• “in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons” – breaching an undertaking is treated as a serious issue of professional conduct and as something which is likely to diminish the public’s trust and confidence in solicitors and legal services providers authorised by the SRA
• “with integrity” – the issue of undertakings is closely linked in integrity and trust in the legal process

Paragraph 1.3 in the Code of Conduct for Solicitors requires that:

“You perform all undertakings given by you, and do so within an agreed timescale or if no timescale has been agreed then within a reasonable amount of time.”

If you fail to comply with a personal undertaking, you are prima facie guilty of professional misconduct.

The SRA cannot

– Require the solicitor to comply with the terms of the undertaking
– Award compensation for the breach of the undertaking
– Release the solicitors from the terms of the undertaking

In the SDT case of SRA v Seddon and Gowlings Solicitors Limited 12236 – 2021, both the solicitor and the firm were fined £12,000 for failing to perform an undertaking given to another firm and the lender.

Final Words

Giving an undertaking has serious consequences but are also a fundamental part of legal practice especially in conveyancing and litigation. You need to consider whether there are alternatives to giving of an undertaking and the appropriate person/entity to give the undertaking.

If you require assistance in regards to professional undertakings, call our Dispute Resolution experts now on 0330 822 3451 or request a call back.