1. Introduction
1.1. Who should read this Guidance Statement?
This Guidance Statement is for solicitors and law practices.
1.2. What is the issue?
A practitioner in receipt of a request or authority to transfer a file may wonder at the reasons for the client’s actions – especially if it is an active matter, or the client is one of long standing. However, unless there are genuine1 concerns around the client’s capacity, an elder abuse issue or similar, the file must be transferred in a prompt and courteous manner.
This Guidance Statement provides protocols to assist practitioners in complying with their ethical duties, to both colleagues and clients, when dealing with the transfer of files to another practitioner or the client.
1.3. Status of this Guidance Statement
This Guidance Statement is issued by the Queensland Law Society (‘QLS’) Ethics and Practice Centre for the use and benefit of solicitors.
This Guidance Statement does not have any legislative or statutory effect. By having regard to the content of this Guidance Statement it may be easier for you to account for your actions if a complaint is later made to the Legal Services Commission.
This Guidance Statement is not legal advice, nor will it necessarily provide a defence to complaints of unsatisfactory professional conduct or professional misconduct.
This Guidance Statement represents a standard of good practice and is endorsed by the QLS Ethics Committee.
2. Ethical principles
ASCR
Rules 4, 13, 14, 15 and 16 apply to this Guidance Statement.
These rules impose a professional obligation not only upon the principals of a legal practice but also on the solicitor within that legal practice who has designated responsibility for a matter.
3. Client files
Client files are not specifically defined in the Australian Solicitors Conduct Rules 2012 (Qld). They effectively constitute a complete record of a client’s matter, comprised of material that may be categorised as either documents which belong to the solicitor or documents which belong to the client. Practitioners are entitled to retain documents which are their property, but when transferring a file the practitioner must produce all documents which are the property of the client. Client files can be held by a practitioner or law firm in physical or digital form; the form may depend on the agreement between the client and the practitioner.2
3.1. Client’s property
Documents belonging to the client are documents which were:
• prepared by the solicitor for the benefit of the client and paid for by the client;3 or
• prepared by a third party and sent to the solicitor with the intention that they belong to the client (other than those paid for by the solicitor).
Documents created before the commencement of the retainer, but sent to the practitioner during the retainer (whether by the client or a third party) are held by the practitioner as agent for the client or third party.
3.2. Solicitor’s property
Documents belonging to the solicitor are documents which were:
• prepared by a solicitor for their own benefit or protection, and for which the client has not been charged; or
• sent to the solicitor by the client, and intended by the client to belong to the solicitor.
Solicitors and clients may disagree on the category that a particular document falls into, especially in the case of notes made by a solicitor during meetings with the client or third parties.4 The status of a document will be a question of degree, and will involve the determination of the dominant purpose for which the document was created.5
In Alexiou v Alexandra White and ors t/as HWL Ebsworth Lawyers,6 Cavanagh J of the New South Wales Supreme Court ordered a law firm to hand over notes taken by a solicitor at various meetings. While the client had not been specifically charged for the taking of the notes, they were charged for the attendance of two solicitors at those meetings. His Honour found (in the absence of evidence to the contrary) that one of the solicitors was in attendance solely for the purpose of note-taking.
His Honour also emphasised that what a client pays for is what the solicitors actually do at the meeting. His Honour concluded (at [73]):
[T]he solicitors have charged for the work that they have done while attending the meeting. That would include engaging in dialogue with the other persons, making statements and representations on behalf of the client and making file notes of what was said by all involved. The work is conveniently summarised in the bill as attendance at the meeting, but that which was paid for was the substantive work performed.7
It is worth noting that neither of the solicitors who attended the meetings in question gave evidence. Had direct evidence of the purpose of the file notes been given the decision may have been determined differently. However, it is clear that by charging the client for the attendance of a solicitor whose sole function was to take notes, the notes produced were client property.
For a list of examples of client property and solicitor’s property, see Appendix C of the Australian Solicitors Conduct Rules Commentary.8
4. Transfer of files
A solicitor or firm with possession of client documents holds those documents as a bailee,9 and must therefore return the documents to the client, or transfer them to another firm, upon the client’s request (subject to any valid lien).10 The client is under no obligation to explain or justify their decision, and need only comply with whatever contractual obligations in relation to termination/transfer of files that have been agreed in the terms of the retainer.
4.1. Authority to transfer
A solicitor is bound to act in accordance with the lawful, competent instructions of their client,11 including the instruction to transfer the matter to another solicitor or firm.12 The solicitor may contact the client to confirm those instructions, if the authority is received directly from the new legal representatives.13 The solicitor as a matter of good practice should inform the transferee solicitor of the intention to confirm the client’s instructions to transfer the file and to arrange for the orderly transfer of the client’s matter(s) to the other legal practitioner.14 However, if the client confirms the instructions then the solicitor must comply. Specifically, the solicitor must not seek to persuade the client to change their mind or withdraw the transfer authority.15
The form of the authority will depend on the terms of the retainer, and prudent practitioners may wish to specify how the authority may be given in the client agreement.
4.2. Format/means of delivery
When returning client files, or transferring them to another firm, practitioners should ensure that the files are in good order, complete and in a format that can be utilised by the client/new lawyer.16 Again, covering the issue of file return or transfer in the client agreement is prudent and may save time, money and stress.
Practitioners should note that fees for storage and/or retrieval of client documents cannot be charged unless that is expressly agreed in the client agreement.17 According to Legal Services Commissioner v Rose:
The policy consideration behind the rule is obvious. Clients are to be informed in advance of a fee that they might incur. Unless a client has agreed in writing to pay a charge, no charge can be made by a legal practitioner for the storage of documents or their retrieval from storage. In other words, Mr. Rose is welcome to charge a fee, but only if he informs his client of the fee, and obtains written consent to payment of the fee.18
If the client agreement contains clauses to this effect, it is strongly recommended that they are specifically drawn to the attention of the client prior to signing, especially if those clauses contain terms in favour of the solicitor that would be unusual in the circumstances.19 In light of the decision of Justice Fryberg in Re Morris Fletcher and Cross’ Bills of Costs,20 there is a fiduciary obligation to make clients aware of unusual terms that may favour the practitioner.
4.2.1. Physical documents
Original client documents that are held in physical form should be returned to the client in the same form in which they are held, unless otherwise agreed. If the client seeks the documents in a different form or forms, the practitioner is under no compulsion to comply and can charge a reasonable fee.21
Copies of documents made for the practitioner’s purposes and for which the client has not been charged do not need to be provided to the client.
4.2.2. Electronic documents
Only copies of electronic documents need to be provided and should be provided in the same format in which they are held by the transferring firm/practitioner.22 Documents held in electronic form should be provided in electronic form, and not printed out (which may lose meta data and also deprive the client of the utility which is inherent in electronic documents) unless otherwise agreed.
As with physical documents, if the client seeks the documents in a different form or forms, the practitioner is under no compulsion to comply and can charge a reasonable fee.
For an in-depth consideration of the formats in which client documents are to be stored and returned, refer to Guidance Statement No. 06 - Form of Delivery for Client Documents.
4.3. Delivery to be ‘as soon as is reasonably possible’
Rule 14 of the ASCR provides that on completion or termination of a client’s retainer, and on request of a client or a person the client authorises, a solicitor must deliver the files as soon as is reasonably possible (subject to any effective lien or any orders which may be made by a court of competent jurisdiction in respect of the delivery of the client’s documents). What constitutes ‘as soon as reasonably possible’ is a question of fact dependent upon the circumstances.
That said, officers of the court have a duty to the courts and the administration of justice, and it follows that files should be transferred with reasonable promptness to ensure that an active matter is not delayed, or a former client’s right to efficient justice compromised. The courts have recognised that (in criminal matters at least) the interests of justice and a person’s right to a fair trial can prevail over a solicitor’s lien.23 It stands to reason that the urgency with which the file is required – based on factors such as time limits, directions made by a court or tribunal, and hearing dates – will be a factor in how quickly a file must be transferred. Any delay which compromises the efficient progress of a matter should be avoided, and may become the subject of disciplinary proceedings.
Even when a file is not active, however, practitioners should be mindful that the file is the client’s property, and absent any exceptional circumstances the expectation is that the file would be transferred in a matter of days, not weeks. Any delay beyond that which is justifiably necessary to prepare the file for transfer runs the risk of being considered unreasonable.
4.4. Objections/concerns
Although a practitioner receiving instructions may genuinely hold the view that the transfer is not in the client’s best interests, that is not in itself a sufficient reason to delay or refuse to transfer the file.
A solicitor who receives notice from another legal practitioner that the solicitor’s client has instructed or retained that legal practitioner may, after notifying the other legal practitioner, communicate with the client for the purpose of confirming the client’s instructions and arranging for the orderly transfer of the client’s matter to the other legal practitioner.24
It may be that in some circumstances a practitioner has a genuine concern that the client has lost competence or is being subject to undue influence in relation to the transfer of the files. This can be a particular risk in relation to elderly clients in deteriorating health, and in such a case a solicitor is within their rights to take steps to ensure that the client is indeed competent, as long as their concerns are sound.
Practitioners who have these concerns should keep in mind that they are inherently conflicted in such circumstances, as they have a vested interest in keeping the client. Given the potential repercussions and the complexities of these matters, practitioners are encouraged to consider whether they should first seek guidance from the QLS Ethics and Practice Centre, a QLS Senior Counsellor or a senior colleague with no connection to the matter before taking any action on suspicions of lack of competence or undue influence.
The case of Dyce v David Landa Stewart Pty Ltd25 is instructive in this regard. In that case, a solicitor raised concerns about the competency of a client who had provided instructions to transfer his files to new solicitors; concerns regarding undue influence were also raised.
The court did not dispute the former solicitor’s ability to raise such concerns, but noted that when they were appropriately addressed the solicitor ought to have transferred the files. In relation to the question of competence, the court found that the provision of medical evidence should have neutralised this issue.26
As for the concerns about undue influence, the court noted that the fact that the documents were to be transferred to another solicitor who had the same fiduciary duties as the first solicitor held in relation to the client meant that the concerns were no longer an issue for the first solicitor.27
4.5. Liens
Solicitors are entitled to withhold possession of client documents and property (with some exceptions) until their costs are paid. However, the right to withhold is not absolute; if it is the solicitor who has terminated the retainer, it is open to the court to require the solicitor to deliver up the file to the new firm.28
Guidance is given in rule 15 of the ASCR, which in short provides that the documents must be released if:
• the client’s matter is being transferred to new solicitors, the new solicitor agrees to hold the documents subject to the lien and with reasonable security for the unpaid costs; or
• agreement is reached to the effect that the first solicitor’s costs will be paid on the completion of the matter; or
• reasonable security for the unpaid costs is received.
Note that not all documents can be the subject of a lien (such as wills)29 and that where documents may help the defence of an accused person, the lien will likely give way to the interests of justice.30 An in-depth consideration of liens is beyond the scope of this Guidance Statement; practitioners should consult the commentary to the ASCR, rule 15, and chapter 16 of Lawyers’ Professional Responsibility, G E Dal Pont for further information.31
4.6. General duties of solicitors on termination of retainer
Solicitors have a fundamental duty to act in the best interests of the client, to be honest and courteous in their practice, and to act competently, diligently and promptly. They likely remain subject to these duties in relation to the end of the retainer, at least up until the transfer of a matter to new solicitors is complete.
To ensure the appropriate discharge of those duties, practitioners should endeavour to ensure that:
• as far as reasonably practicable, the client is not disadvantaged by reason of the termination of the retainer;
• due consideration is given to whether the termination will disadvantage the client (unless the termination is mandated by law or professional rules) and noting also the terms of the relevant client agreement;
• reasonable care is exercised throughout the process to avoid any foreseeable harm to the client or their interests;
• reasonable notice is given to the client in the circumstances, for example, so that they are able to engage new solicitors;
• they co-operate with the new solicitors and (subject to any lien) deliver client documents promptly (see 4.3 above);
• they notify the new solicitors or client (where delivered directly, in which case this should be in writing) of any impending work and limitation periods;
• they notify the other party, and any relevant third parties, that you will no longer be acting in the matter; and
• if the matter is litigious, they file any notice that may be required32 with the relevant court or tribunal.
NB: if the file is being delivered to the client rather than new solicitors, the client should be warned of the consequences of failure to promptly attend to outstanding matters, and a firm recommendation to engage new solicitors as soon as possible should be given.
See also QLS Guidance Statement No. 8 – Termination of a Retainer.
5. More Information
Solicitors are also referred to the Queensland Law Society, The Australian Solicitors Conduct Rules 2012 in Practice: A Commentary for Australian Legal Practitioners, Queensland Law Society (2014).
For solicitor’s insured with Lexon Insurance, see also Lexon’s LastCheck File Transfer – Sending and Receiving, which is available from www.lexoninsurance.com.au.
For further assistance, including difficulties you may be experiencing as either a supervisor or as a practitioner who is being supervised, please contact an Ethics Solicitor in the QLS Ethics and Practice Centre on 07 3842 5843 or ethics@qls.com.au or a QLS Senior Counsellor.
1 Dyce v David Landa Stewart Pty Ltd [2021] NSWSC 590 (‘Dyce’).
2 For a detailed examination of the form of client files, see Queensland Law Society, Guidance Statement No. 6 - Form of Delivery for Client Documents (2016). Examples of what may constitute a client document are discussed at paragraph 14.1A and Appendix C of The Australian Solicitors Conduct Rules 2012 in Practice: A Commentary for Australian Legal Practitioners (‘ASCR Commentary’).
3 When work is done for a non-itemised fixed fee, this will include documents the cost of which could be said to be included in that fee.
4 Wentworth v De Montfort (1988) 15 NSWLR 348, 358E (Hope JA).
5 Alexiou v Alexandra White [2021] NSWSC 485, [36].
6 Ibid.
7 Ibid [73].
8 ASCR Commentary (n 2).
9 The Public Trustee of Queensland as a Corporation Sole [2012] QSC 178.
10 Australian Solicitors Conduct Rules 2012 (Qld) r 14 (‘ASCR’).
11 Ibid r 8.
12 Dyce (n 1) [122].
13 ASCR (n 10) r 33.1.3.
14 Refer to Legal Profession (Solicitors) Rule 2007 (Repealed 01 June 2012) r 25.2 (‘LPR’).
15 G Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 7th ed, 2020) 109.
16 See Queensland Law Society, Guidance Statement No. 6 - Form of Delivery for Client Documents (2016) for further information.
17 ASCR (n 10) r 16; Legal Services Commissioner v Rose [2007] VCAT 2180; G Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 7th ed, 2020) 118.
18 Legal Services Commissioner v Rose [2007] VCAT 2183, [12].
19 This might be relevant to whether a given client agreement is fair and reasonable. For more detail, see the discussion in McLaren v Wilstshire [2019] QSC 305. See also the summary of these principles in Simons v Dowd Lawyers Pty Ltd [2021] QCAT 134, [27].
20 [1997] 2 Qd R 228.
21 A reasonable fee will depend on the circumstances and context in which the request is made of the practitioner.
22 ASCR Commentary (n 2) para 14.1B.1; Queensland Law Society, Guidance Statement No. 6 - Form of Delivery for Client Documents (2016).
23 R v Storer (1993) 65 A Crim R 130 (‘Storer’).
24 LPR (n 14) r 25.2; ASCR (n 10) r 33.1.3.
25 Dyce (n 1).
26 Ibid [127].
27 Ibid [131].
28 Hughes v Hughes [1958] 3 All ER 179.
29 Hawkins v Clayton (1988) 164 CLR 539.
30 Storer (n 23).
31 G Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 7th ed, 2020).
32 Uniform Civil Procedure Rules 1999 r 986-987; Federal Court Rules 2011 r 4.04.