Beware the help of third parties

The practice of 'cold calling' on council tenants by companies and individuals anxious to take an active role in 'the housing repair market', has taken hold in some parts of the country, fuelled by the disrepair of inner-city housing estates and the reluctance of many housing authorities to spend large sums of money.

Solicitors should look closely at the circumstances in which new clients are recommended to them.

This case involved a not-for-profit organisation specialising in housing disrepair matters.

Representatives signed the tenants to a conditional fee agreement (CFA) in which 'a solicitor of their choice' would act, and take 'a small percentage' of any damages awarded.

The choice of solicitor was made by the company and the extent of the percentage was a mystery to the client.

Ms W did not really understand what a CFA was, and the agreement she entered into to borrow substantial sums from a commercial bank to fund disbursements was not explained to her.

It transpired that she was given no option to instruct a solicitor of her choice.

As far as Ms W was aware, 'those nice gentlemen from the repair firm' were going to help her to put her house in order, literally.

Her case was referred to the solicitors, who trusted the accuracy of the referral and commenced work.

A surveyor called, but the firm failed to tell Ms W of the cost.

The solicitors notified her of their intention to instruct 'your barrister' without explaining the function and the expense, and provided no client care or costs material at all.

No other funding options were discussed, despite Ms W having to borrow large sums of money that she could not afford to repay.

Ms W subsequently complained.

The solicitors assumed that their instructions to their agent, a housing repair company that called on Ms W, had been observed.

The agent provided misleading information and failed to deal fairly with Ms W.

The solicitors could not hide behind the defence, 'but we thought all the proper information had been provided'.

A misconduct finding followed for a breach of practice rule 1.

The partners failed to ensure a freedom of choice and failed to ensure the good repute of the profession.

They had also failed to obtain written instructions from Ms W, required under principle 12.05 of the 1999 guide, as a result of the third party instructions at the outset.

The partners were severely reprimanded.

Considering inadequate professional service issues, the firm had delayed in progressing the matter, failed to obtain instructions for counsel's advice, failed to provide any costs information, and failed to consider and discuss other funding options to which Ms W was financially entitled.

She received 500 compensation.

In addition, the solicitors were directed to waive their costs.

When accepting instructions from a third party it is essential to confirm instructions in writing, and to observe the Costs Information and Client Care Code 1999, whatever assurances may have been given by an agent or representative on your behalf.

A system to ensure compliance and to confirm financial issues could have resolved the matter before any damage was done.

The solicitors assumed that Ms W understood procedure and terminology, a common difficulty in a busy practice.

Every case before the adjudication panel is decided on its facts.

This case study is for illustration only and should not be treated as a precedent