Giving an Undertaking
Despite the importance attached to their observation, undertakings are a part of everyday practice which many solicitors still tend either to over look or, at best, pay insufficient attention to.
A solicitor’s undertaking is not just an enforceable agreement, it is something the breach of which can give rise to professional regulatory sanctions. Despite this, many solicitors do not realise how easily they can arise and how failing to monitor undertakings given by others within the firm can give rise to problems for the firm as a whole.
It is always worth bearing in mind just how easily they can arise and that if entered into without appropriate thought being given to their terms that the firm can be exposed to significant consequences.
The Regulations on Undertakings
The Solicitors Regulation Authority (SRA) Handbook defines an undertaking as:
“a statement, given orally or in writing, whether or not it includes the word “undertake” or “undertaking”, made by or on behalf of you or your firm, in the course of practice, or by you outside the course of practice but as a solicitor or REL, to someone who reasonably places reliance on it, that you or your firm will do something or cause something to be done, or refrain from doing something.”
This is a fairly wide ranging definition and encompasses statements which, whilst not intended to create an undertaking, nevertheless do so.
Undertakings are regarded as being an important part of everyday practice. Chapter 11 of SRA Code of Conduct states in the introduction that solicitors must “act in a manner which promotes the proper operation of the legal system” and that “This includes your conduct in relation to undertakings;.” It goes on to state that whilst “there is no obligation to give or receive an undertaking on behalf of a client …. if you do, you must ensure that you achieve the outcomes listed in this chapter.”
The Chapter then goes on to provide at Outcome O(11.2) that a solicitor “ perform all undertakings given by [them] within an agreed timescale or within a reasonable amount of time;” and provides accompanying Indicative Behaviour provisions which require “an effective system which records when undertakings have been given and when they have been discharged” (IB 11.5) and that “where an undertaking is given which is dependent upon the happening of a future event and it becomes apparent the future event will not occur, notifying the recipient of this.”
Note 1 suggests that Chapter 11 “be read in conjunction with Chapter 7 (Management of your business) in relation to the system you will need to have in place to control undertakings.” It is worth noting, however, that the relevant provisions from Chapter 7 are:
O(7.2) you have effective systems and controls in place to achieve and comply with all the Principles, rules and outcomes and other requirements of the Handbook, where applicable;
O(7.3) you identify, monitor and manage risks to compliance with all the Principles, rules and outcomes and other requirements of the Handbook, if applicable to you, and take steps to address issues identified;
whilst the most relevant related Indicative Behaviour IB (7.3) requires that firms identify and monitor “financial, operational and business continuity risks including complaints, credit risks and exposure, claims under legislation relating to matters such as data protection, IT failures and abuses, and damage to offices.”
Undertakings are also referred to elsewhere in the rules governing solicitors.
The guidance note to Regulation 4: Requirements for sole practitioners of the SRA Practising Regulations 2011 provides at (iii) (d) that practitioners give consideration to “a system for ensuring that undertakings are given only when intended, and compliance with them is monitored and enforced” when producing a compliance plan”, whilst a similar provision is included in the guidance note (iii) (d) of the SRA Authorisation Rules 2011 in relation to authorised bodies.
What constitutes an undertaking?
In deciding what constitutes an undertaking, it is necessary to look at the definition. Breaking it down into its constituent elements, an undertaking:
- must be a statement – which can either be oral or in writing but which does not have to include the words “undertake” or “undertaking”;
- must be made by or on behalf of an individual solicitor or a firm;
- if by a firm, must be made in the course of practice BUT if by an individual can be made outside the course of practice if made by the individual as a solicitor or REL;
- must be made to someone who reasonably places reliance on it; and
- must be to the effect that the individual or firm making it will do, cause to be done or refrain from doing something.
If any of the essential elements are missing then it is likely that it will not be an undertaking but merely an unenforceable promise.
However, it is not always that easy to to spot when an undertaking is and is not made.
Take for example the case of the SRA v Asabe Georgina Adeyemo. In that matter the Solicitors Disciplinary Tribunal held that the words “We confirm that we now have in our possession the file you request and you will be in receipt of a copy of the file no later than 12 January 2009” constituted an undertaking and that failing to perform it was a breach of Rule 10.05(1) of the Solicitors Code of Conduct 2007.
Now compare that with the kind of statement made by many solicitors on an almost daily basis “I have the file in front of me and I will call you back later today”. Is that an undertaking? If the solicitor does not call back until the following day , or even several days later, is a breach of an undertaking. If so, then we are probably all breaching undertakings regularly.
There is a fine line between what is an undertaking and what is a simple promise or even aspiration. Would the position have been different for Ms Adeyemo had she said “I will try and get it to you by 12 January 2009” rather than “no later than 12 January 2009.” Did the fact that her promise was made in response to a request for an undertaking a relevant factor.
As with so many areas of the professional regulation of solicitors, there are no clearly defined rules as to whether a given set of words constitutes a mere promise or an enforceable, binding undertaking. Instead we have to look at the facts of each case.
The key problem with undertakings is that no particular formalities or specific words are needed to create one. They don’t even need to be written down. Furthermore, where there is ambiguity then usually it will be resolved in favour of the recipient of the undertaking rather than the giver – appoint stressed in the case of Reddy v Lachlan  Lloyd‟s Rep PN858 where it was said that “an ambiguous undertaking is generally construed in favour of the recipient” and that there needed to be an examination of the context of the undertaking.
It is essential, therefore, that everyone within a firm is made aware of the dangers inherent in the giving of undertakings and that, except in the case of standardised undertakings in for example conveyancing transactions, that they are given only by partners, directors or senior managers. Of course this will not prevent the “unintentional” undertaking, but it will at least go some way towards ensuring that the danger is reduced.
Giving an Undertaking
Several years ago, in 2009 to be precise, in the heady days before outcomes focused regulation, an Undertakings warning card was issued by the SRA. This warning card stressed that the SRA took breaches of undertaking very seriously and went on to give advice as to the making of undertakings.
The warning card suggested that those giving undertakings should ensure that they are:
Moreover, in giving an undertaking a solicitor ensures that their client’s position is protected and they themselves are not exposed to a breach.
They recommended that a regulated person or firm should:
- Be clear about who can give undertakings;
- Ensure all staff understand they need the client’s agreement;
- Be clear about how compliance will be monitored;
- Maintain a central record to ensure and monitor compliance;
- Prescribe the manner in which undertakings may be given;
- Prepare standard undertakings, where possible, with clear instructions that any departure be authorised in accordance with supervision and management responsibilities;
- Adopt a system that ensures terms are checked by another fee-earner;
- Confirm oral undertakings (given or received) in writing;
- Copy each undertaking and attach it to the relevant file; label the file itself;
- Ensure all staff understand the undertakings they give.
Failure to comply with an undertaking will not only render the defaulting solicitor liable to court sanctions but is also likely to be seen as professional misconduct and could result in the solicitor, or partners/members in the firm, appearing before the Solicitors’ Disciplinary Tribunal.
It will usually be irrelevant that the undertaking was given by mistake, was in terms other than those intended by the giver, was in relation to a client for whom the giver no longer acts, was without the authority of the client, required action by a third party over whom the giver has no control or any of the other various defences which have over the years been put forward. These may be factors which a court will take into account when deciding what action should be taken – but they will still be unlikely to negate the professional responsibility upon the giver.
It should be noted also that breach of an undertaking will be regarded as a failure to comply with the terms and conditions of the firm’s authorisation. As a consequence, it must be recorded and may need to be regarded as a material breach and as such should be reported by the COLP to the SRA as soon as reasonable practicable (see the LDG article on Material Breaches).
In determining whether or not the breach of the undertaking is a material breach consideration should be given to various issues including:
- the potential detriment to the client,
- the value of any money involved,
- the length of any delay,
- the effect upon third parties,
- the potential for loss of confidence in the firm, and
- the overall scale of the problem.
Bear in mind that simply taking steps to remedy the problem will not in itself prevent the breach from needing to be reported.
If your firm finds that it is in breach of the terms of an undertaking and as a result is facing investigation by the SRA or a hearing before the SDT then please contact the Lawyers Defence Group:
- by phone on 0333 888 4070;
- by email to firstname.lastname@example.org;
- by requesting a callback using the form in the right hand menu and someone will call you back; or
- by writing to Lawyers Defence Group at one of the addresses on our contacts page.