Safeguarding vulnerable clients: Guidance on best practice in England and Wales

Background

Bill Johnston, a 60-year-old farmer from Perth in Scotland, was approached by the solicitor representing the partnership that he worked for while he was terminally ill in hospital in December 2019. Despite there being “red flags” as to Mr Johnston’s mental capacity, he signed a revised Partnership Agreement, which transferred assets amounting to more than £400,000 to his business partner, which would otherwise have passed to his family upon his death. Mr Johnston died a matter of weeks later. The solicitor involved was subsequently sanctioned for professional misconduct and fined for his actions.

Under Scottish law, solicitors have the authority to assess the mental capacity of vulnerable individuals to make decisions. The solicitor in this case made a determination that Mr Johnston had the necessary mental capacity to sign the transfer. File notes from the meeting recorded how Mr Johnston had difficulty breathing and was receiving oxygen through a face mask. Mr Johnston was also receiving other treatment and pain medication. The solicitor’s file notes recorded that he was happy to discuss the matter and was therefore judged to have the requisite level of capacity. It's not clear what test was applied.

In the days following the meeting Mr Johnston became confused, alarmed and claimed not to remember the meeting. He was concerned about the transfer of the assets, however given that changing the Partnership Agreement would require the consent of all of the partners, he was not able to revoke the changes that had been made.

Mr Johnston’s family's concerns extended beyond the financial implications. When appearing on Jeremy Vine’s Radio 2 show they emphasised the emotional trauma experienced by the deceased when he discovered the impact on his estate. His daughters are now advocating for legal reforms in Scotland.

They propose involving medical professionals in mental capacity assessments and are campaigning for the law to be stricter for solicitors who fail to adequately assess their clients' capacity. They are also calling on the Scottish Parliament to introduce regulations which would require the presence of an independent individual at the signing of important documents, where there are potential questions surrounding mental capacity and undue influence.

A cross-cultural analysis: What would have happened if this had occurred in England and Wales?

Similar to Scotland, in England and Wales, solicitors are permitted to assess the mental capacity of individuals to enter into transactions. In a lot of cases the statutory test under the Mental Capacity Act 2005 will apply. Although there may also be case law to assist in ascertaining the level of understanding required, such as in the case of making a will, lasting powers of attorney, entering into a contract or making a lifetime gift. Guidance also exists which recommends the involvement of an appropriate medical professional in cases where a person's capacity is in doubt, particularly through reason of age and serious illness. Although not legally binding, this guidance is frequently followed in such cases.

Law Society Practice Note

The Law Society Practice Note on Meeting the Needs of Vulnerable Clients sets out how solicitors in England and Wales should act with vulnerable clients, offering guidance on proper conduct, mental capacity assessment and adherence to ethical standards. Under the guidance key takeaways for solicitors are:

1. Mental capacity assessments: Solicitors must rigorously assess their client's capacity to ensure that their client fully comprehends the implications of any decision they are making. If in doubt, they should involve a medical professional who can conduct an independent capacity assessment. The Practice Note also highlights a number of risk factors that solicitors should consider including, but not limited to, any cognitive impairment, ill health, communication difficulties and dependence on others. Solicitors should approach capacity assessments sensitively and consider red flags collectively. If warning signs are observed, they may warrant further investigation or consultation with medical professionals.
2. Undue influence considerations: Solicitors should be vigilant against any potential undue influence exerted on the client, especially in vulnerable situations. The power dynamics between solicitors and clients should be carefully managed to prevent any coercion or manipulation. Solicitors also have to ensure instructions come from the client, free of undue influence.
3. Informed decision-making: Solicitors are obligated to facilitate informed decision-making by ensuring that clients understand the nature and consequences of the decisions they are making. This includes providing ample time for the client to reflect on the choices presented to them.

By following this guidance solicitors can ensure they are safeguarding their clients’ while mitigating the risks of professional misconduct.

Solicitors should also consider whether an independent individual should be present during the signing of important documents where capacity is a concern. This person can provide an additional layer of assessment regarding the client's capacity and the circumstances surrounding the decision.

Furthermore, detailed records should be maintained, documenting the client's capacity assessment, discussions and decisions. This documentation not only serves as a legal safeguard, but also promotes transparency and accountability.

Conclusion

Mr Johnston's daughters are calling for legal reforms in Scotland to require that a medical professional co-signs all legal documents of a vulnerable person to demonstrate that they have the necessary legal capacity.

Such a suggestion, however, fails to take into account that matters like this are ultimately a legal and not a medical test and the courts are the final arbiters in this regard. The opinions of medical professionals, while persuasive, are only part of the evidential considerations a court would weigh in the balance when applying the necessary legal test. What’s more, even when best practice may be to instruct a medical professional to reach a conclusion as to a person’s capacity, when time is of the essence and there are financial constraints this may not always be possible. 

There were various professional practice points which it seems the solicitor acting in this matter failed to properly consider and it serves as a cautionary tale of the potential risk to legal professionals when dealing with vulnerable clients, particularly in situations where matters of conflict of interest, mental capacity and undue influence are in play.