Acting for Family and Friends: Assessing the Risks and Handling Requests
By Janice Mucalov, LL.B.
Almost all of us have had a family member or friend approach us for help with a legal matter. Perhaps they want you to prepare their will, handle a new house purchase, advise on a family business or even act for them in their divorce. Naturally, you want to help out. Uncle Joe probably expects to get a deal on the fees and maybe you’re even willing to provide your services for free.
But should you get involved? Does your law society even allow you to? Are you insured if you take on your sister’s lawsuit against her renovation contractor? And what are your options for dealing with a request by a relative or friend?
A Risky Business
Acting for friends and relatives is risky business, notes Dan Pinnington, director of the risk/management program for LawPRO, the professional liability insurers for Ontario’s lawyers. Here are a few reasons why:
You may not be objective
“The big risk is your inability to give honest, independent, objective advice,” explains Pinnington. “No matter how hard you try, when you’re dealing with a family member, your ability to be independent is affected.” The relationship between you and a relative or friend lacks the professional distance you have with other clients, and the emotional connection can cloud your judgement.
Professional rules of conduct allude to this, and in some cases, deal directly with the issue. The CBA Code of Professional Conduct deals more broadly with conflict of interest situations, while some provincial codes deal specifically with the issue of acting for family and friends.
For example, Rule 2 of Ontario’s law society rules says that you must be “honest and candid” when advising clients. It also prohibits acting when there is likely to be a conflict of interest. The commentary states: “Where a lawyer is acting for a friend or family member, the lawyer may have a conflict of interest because the personal relationship may interfere with the lawyer’s duty to provide objective, disinterested professional advice to the client.”
If the matter is a straightforward real estate transaction and there are no emotions involved, you may be comfortable acting for your brother-in-law. But if it’s a family law concern, this makes it harder to give honest and candid advice, and you may have a professional duty to decline to act.
BC’s Professional Conduct Handbook goes further. Rule 1 of chapter 7 says that you cannot act if a relative or friend has a “direct or indirect financial interest” in the matter that would reasonably be expected to affect your professional judgement. Nor can you act, according to Rule 2, if the relative or friend has a “membership interest” that could affect your professional judgement, for example, being a member of the same social club.
So check your province’s professional conduct rules – they’re likely to provide some guidance.
You may not be insured
Even if rules don’t specifically prevent you from acting, you may be excluded from insurance coverage if you do—a big incentive for saying “no” in certain circumstances.
In BC, Exclusion 6 of the province’s compulsory professional liability insurance policy denies coverage if you act for a close family member. You won’t be covered for a claim arising from your error where the payment would directly or indirectly benefit you, your family or your law firm. Family members are defined to mean a spouse (including a common-law spouse), children, parents and siblings. So if you settle your father’s personal injury claim and he later sues you for professional negligence for mishandling the case, the claim against you won’t be covered because payment of it would directly benefit your father.
Ontario doesn’t have a similiar family exclusion in its LawPRO policy. But both Ontario and BC deny insurance benefits for claims “made by or in connection with a business enterprise or corporation” in which you or your spouse or firm partners have an ownership interest of more than 10% – the so-called “business exclusion.” This means that if you and your spouse own all the shares of Apple A Company, which owns 50% of the shares of Banana B Company, which in turn owns 25% of the shares of Orange O Company, any claim arising from legal services you provide to Banana B Company or Orange O Company would be denied.
The reasoning behind the “business exclusion” is that the negligent lawyer shouldn’t indirectly benefit from their mistake – which would be the case, if, for example, benefits covered their spouse. BC simply extends this to also encompass personal as well as business matters for close family members, says Brad Daisley, public affairs manager for The Law Society of BC.
You may not be competent
Another concern when acting for family or friends is whether you’re sufficiently skilled in the particular practice area to provide the service requested. “Because of your personal relationship, you may be approached in a capacity outside your usual area of expertise, and you become a dabbler – that’s the area where competence becomes an issue,” says Pinnington.
As well, you may feel extra pressure to help a family member or close friend succeed with their lawsuit or achieve their goal – so much so that you’re driven to take an unduly aggressive or unreasonable position with the other side, to the detriment of the person you’re supposedly helping.
You may cut corners
Due to the closeness of the relationship, you may be less formal if acting for a friend or relative than you would if acting for a regular client, and you’re more likely to omit certain steps. You may not open a file, complete a conflicts check, sign a retainer agreement, or obtain and confirm instructions in writing – all steps you would otherwise take.
You’re also more likely to be more casual when it comes to documenting the file properly or sending correspondence to a client who is closely connected. This is especially important when considering that a breakdown in lawyer/client communications underlies half of all professional negligence cases.
And if the family member or friend isn’t a fee-paying client, there’s more of a risk that you’ll treat the file informally than if you’re offering a reduced fee to a real client. If you’re helping out your adult daughter for free, it can be easy to forget that you owe her the same duty of conscientiousness that you owe to all your other clients.
Family and friends make poor clients
Family members, in general, can be very demanding clients. “They can be the most unreasonable clients because of their personal relationship with you,” says Pinnington. “They may not want to accept what they’re being told.”
And if the friend/client is also a lawyer in the same firm, “they won’t recognize there’s a door,” warns Simon Chester, a partner with Heenan Blaikie in Toronto, who has a special interest in knowledge and practice management. Expect to be interrupted, even pestered, at inconvenient times.
The payment of fees is also an awkward matter. It’s uncomfortable enough dealing with fees with regular clients—much more so when you have a personal relationship with the individual. And it’s tricky recording your time, says Chester. “Is it a friendly phone conversation with your friend, or a ‘.4’ because you’re discussing their file?”
If the work involves a private matter, understand that your friendship could be destroyed if the person can’t look you in the eye afterward. And while solicitor/client confidentiality applies, your client may distrust you anyway and worry that you’ll disclose private information to other friends or relatives. So if you take on an emotionally-laden case, don’t be surprised if your relationship later deteriorates.
“Other dynamics are also at play when you act for a family member or friend,” cautions Lonny Balbi of Balbi & Company Legal Centre in Calgary. “It’s hard to fire a client who is a family member. It also looks bad if you go to court representing a family member – that hurts your reputation.”
You expose yourself and your firm to the risk of a claim
Finally, because of the inherent problems involved, you face an increased risk of a negligence claim. “We do see relatives suing lawyers who are family members,” says Pinnington. Very often, the reason is because the lawyer was “dabbling” and took on a matter outside their practice area. “Acting for a spouse of a relative or friend who becomes an ex-spouse can also colour how they perceive you handled the file and lead to a lawsuit against you,” adds Pinnington.
Remember too that solo practitioners and small firms generally have a higher claims rate. So if you’re not associated with a larger firm, your risk of a claim is exacerbated if you take on a relative or friend as a client.
And it’s not only yourself you need to worry about. You also put your firm at risk if you’re sued. Note that if you fall within the “business exclusion” or “family exclusion” of your professional liability insurance policy, your firm also won’t be covered.
How to Handle Requests from Family and Friends
No “one-size-fits-all” advice is appropriate for every situation—each request for legal services from a friend or family member may warrant a different response. But these guidelines can help you to develop an office policy so your firm doesn’t have to deal with requests on an ad hoc basis every time a junior lawyer wants to draft their grandmother’s will or a partner wants to help out a neighbour with a family matter.
Consider turning down the file
The best rule seems to be “don’t accept the case”. Many large firms have policies prohibiting their lawyers from acting for friends or relatives. “Listen to the voice inside you,” advises Pinnington. “If it says don’t do it, then don’t do it.” He points to surveys conducted at the end of LawPRO’s handling of malpractice claims, which reveal that most lawyers who are sued say their gut instinct predicted trouble right from the outset.
Refer the matter to another lawyer
If appropriate, refer the matter to another lawyer in the firm, and explore a mutual reduced billing rate among firm lawyers for clients who are family or friends. Blake, Cassels & Graydon LLP in Calgary, for example, has a policy that another lawyer must act if the client is a family member or friend, and fees are charged.
Or refer the matter to another firm. Explain to Aunt Jean that she’ll be better represented by another lawyer. Advise the other lawyer that Aunt Jean is your favourite aunt, and mention that any consideration they can offer on the fee aspect would be much appreciated. As a professional courtesy, the other lawyer will probably discount their fees by 10 to 20 per cent. For a very close family member, you could even pay part of the fees yourself. Balbi, for example, once helped out a relative by paying the other lawyer’s retainer.
In BC, the lawyers insurance program advises as follows: “Protect yourself by having one of your colleagues provide legal services for you or your family on personal matters, or retain outside counsel. On business matters in which no one at your firm can act, protect yourself by retaining outside counsel.”
Get firm approval
If you feel that you can act in the matter with the proper professionalism required and want to personally take on the case, check that the managing partner agrees. If you carry on a solo practice, ask another lawyer friend for their opinion.
Some firms require disclosure and department head approval before a lawyer can accept work from a family member or friend; an objective person makes the decision as to whether the lawyer can act. As a matter of policy, the lawyer must persuade the practice head that either the matter won’t expose the firm to any risk (e.g., notarizing documents) or is one that is easy for the lawyer to handle.
Maintain your usual practice standards
If you have the firm’s approval to act, treat the person like any other client and maintain your usual practice standards and procedures:
- Formalize the relationship. Suggest that your niece make an appointment to meet in your office to discuss the matter – don’t chat with her about her case over dessert at a family gathering.
- Do your usual conflict of interest check, and open a file.
- Discuss time frames and possible outcomes so the person has realistic expectations.
- Obtain proper instructions and maintain a written record of your work.
- Communicate your progress and results, preferably in writing.
Discount the fee at the end, not upfront
Because it isn’t possible for a small firm to give staff the same benefits enjoyed at larger institutions, Balbi says that one benefit a small firm may want to offer is the provision of certain legal services for staff (including lawyers) and their friends and family at discounted or nominal rates. Possibilities include free wills and real estate transactions for disbursement costs only. But remember that pro bono doesn’t mean cutting corners.
Where a flat fee isn’t quoted, one way to minimize the inclination to be less careful is to exercise control over the billings at the right-off stage, not upfront. The managing partner, practice head or a firm colleague should be involved in the decision about what fee, if any, is to be charged.
Janice Mucalov is a freelance writer in Vancouver.
Neither the author nor the CBA should be construed as endorsing any product or website listed in this article. The views expressed in this article are those of the author and do not necessarily reflect the views of the CBA.|
In this document, any reference to "jurist" or "lawyer" includes, where appropriate, "Québec notary".