It is unwise to enter into a commercial relationship with a current client outside the scope of an agreed retainer for professional services. The prudent course is to refuse to act.
As a lawyer, you owe your clients your undivided loyalty and have a duty not to permit a conflict of interest to arise. A commercial arrangement that results in your receiving a gain (beyond your professional fees for services rendered) is likely to put you in breach of this duty. It is important to be aware that any improvident transaction could be presumed to be the result of undue influence over your client, unless you prove otherwise.
Commercial relationships can include:
- lending or borrowing money
- buying, selling, leasing or hiring property
- accepting a gift, including a testamentary gift
- investing your own money or receiving investment money from another as a co-owner in a company or other business structure
- providing financial advice, and
- becoming a director of a company or a trustee of a trust.
Entering a commercial relationship with a client raises clear risks that you will breach your professional duties under the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (Solicitors’ Rules) and the Legal Profession Uniform Conduct (Barristers) Rules 2015 (Barristers Rules) to avoid:
- any compromise to your integrity and personal independence (Solicitors’ Rules r 4.1.4, Barristers Rules r 23)
- engaging in conduct likely to diminish confidence in the legal profession or the administration of justice or otherwise bring the profession into disrepute (Solicitors’ Rules r 5.1, Barristers Rules r 8(c))
- a conflict between your own interests and the duty to serve your client’s best interests (Solicitors’ Rules r 12.1, Barristers Rules r 101(b))
- exercising undue influence intended to dispose a client to benefit the solicitor in excess of fair remuneration (Solicitors’ Rules r 12.2, Barristers Rules r 47), and
- borrowing any money from a client (Solicitors’ Rules’ r 12.3, Barristers Rules r 48).
Whether or not a commercial endeavour with a client goes badly or well is irrelevant: In both cases, your integrity is at risk. If the arrangement goes badly, you risk being distracted and antagonistic; and if it goes well, you risk financial or personal influence or dependence.
Acting on behalf of someone who is an existing business associate is likely to raise all the same risks that entering a commercial arrangement with an existing client would raise.