You are responsible for ensuring that any mortgage borrower who does not receive a direct benefit from the mortgage proceeds (or if there are other circumstances that reasonably or reasonably warrant it) has received independent legal advice (from a non-bank lawyer) to ensure that the bank`s security and position are not compromised. Independent legal advice is never routine, even if the person seeking advice has already made a decision and only wants to have it approved. Your advice may be the only opportunity for the client to objectively review a transaction that exposes the client to liability or significant damage, while primarily benefiting another party. It is important that you carefully interview the customer, gather information, analyze problems, and formulate advice. What else can you do? Read this annotated copy of the Law Society`s ILA Model Checklist. It contains LIF`s tips and suggestions to provide you with a one-stop shop for your ILA risk management. This checklist has been specially developed for domestic contracts. A person seeking independent legal advice is just as much your client as anyone else. Resist the temptation to hurry or take shortcuts.
A lower level of service isn`t justified just because your meeting is short and you may no longer see the customer. Keep in mind that a modest $150 in independent legal advice (ILA) can expose you to significant medical malpractice. A lawyer warned the parents not to give their son a mortgage. He told them it was a terrible mortgage, but never confirmed this advice in a letter. When the parents subsequently became incompetent, the Public Trustee considered whether appropriate advice had been given. A client who received advice on a mortgage and collateral from a bank mistakenly thought that the collateral was limited to the amount of the mortgage. In fact, it was an unlimited guarantee. To ensure that the client receives an appropriate ILA and that your advice is clearly understood and documented, follow these steps: If you offer independent legal advice, a checklist provides you with a handy tool to ensure you cover all the bases when discussing the underlying transaction and your client`s relationship with that transaction. LAWPRO`s ILA Checklist for Domestic Contracts (PDF format) helps you clarify all relevant questions with your ILA client.
LAWPRO has also created a generic ILA checklist. First and foremost, use a checklist. This is your starting point to make sure you`re meeting your ILA obligations and that you have a real advantage in proving later that you did. In fact, in an Ontario decision,1 the court found that the ALI lawyer`s use of a checklist and detailed notes helped establish that the client had voluntarily signed a mortgage and understood its nature and consequences. Convincing evidence of your appropriate ILA helps us deal with any claims that arise quickly and efficiently. For many claims arising from subsequent disputes of a transaction, the lawyer has given appropriate advice. However, our ability to prove it is hampered by the lack of adequate grades – or grades. It is crucial to document your advice.
It`s unlikely that you`ll have an independent recall from a case where you`ve only met the client once, and probably a long time ago. 6. Consider whether it would be a good idea to use a checklist when meeting with the client. With the help of an ILA checklist, you are better able to successfully ward off a negligence claim in relation to independent legal advice. For example, in the recent case of Webb v. Tomlinson, 2006 CanLII 18192 (ON S.C.), a lawyer successfully defended an allegation of negligence arising from the provision of independent legal advice. Attorney Tomlinson took detailed notes and used a checklist included in a LAWPRO magazine. Justice Belobaba referred to both the notes and the checklist when he held that the lawyer had taken reasonable steps to explain the nature and consequences of the hypothec signed by the plaintiff in this case.
Independent legal advice (ILA) can be risky. On average, four to five lawyers contact us each year about ALI issues (examples below). Protect yourself. The following material will tell you how. The circumstances or instructions of the client may require you to inform a client of the need for independent legal advice (ILA). Informing a client of the need for ILA is not discretionary. You should not proceed with the degree without having an ILA certificate proving that the client has received independent legal advice. The ILA is usually awarded to a client who is about to close a transaction or agreement. In British Columbia, the most common applications for ALI are for marriage and separation agreements, as well as mortgages and guarantees. The other party wants protection against challenges to the applicability of the agreement based on your client`s allegations of undue influence, lack of understanding, or incapacity.
You need to make sure that your client fully understands the nature and consequences of the transaction and that they do so voluntarily. We know that administering the ILA can be risky. The claims that lawyers usually file arise from the fact that the client disputes a transaction in which he has received little or no benefit or has been harmed. A client may claim that he did not understand the document he signed. Another may say that she signed only under duress or due to undue influence, or that she was never warned that the transaction was reckless. In other cases, the claim arises from a misunderstanding between the lawyer and the client about the extent of the lawyer`s advance. If the ILA is granted in a case involving additional steps, the client may blame the lawyer if such a request is missed. A lawyer handed over the ILA to a landlord who apparently wanted to give his property to a friend.
The client spoke only Korean and the friend offered to translate. The client later stated that he did not understand what he was doing. A lawyer signed an ILA certificate for an 86-year-old man who mortgaged his home for $75,000. He wanted to lend the money to a virtual stranger simply because of her verbal promise of repayment. It did not, and the mortgage defaulted. In retrospect, this lawyer wishes he had simply refused to act. Section 3.4 – Duty to avoid conflicts of interest The lawyer gave the ILA to a wife under a separation agreement. The woman later said that the settlement was a bad deal for her and that she did not know it was final.
9. If the ADI is a legal transaction (direct or indirect) between a lawyer and a client, rule 3.4-29 of the Code of Professional Conduct must be respected. Resources: A friend from another law firm asked a lawyer to give ILA a mortgage he had given to a young employee and her husband. She witnessed the couple`s signatures and assumed everyone understood the deal. Apparently, the employee`s husband did not. A customer contacted ILA regarding the sale of his commercial fishing vessel. He had received documents from the buyer`s lawyer and wanted to ensure that they accurately reflected the agreement he had reached.