Giving and Accepting an Undertaking

Undertakings are a fundamental part of the practice of a solicitor and their importance cannot be stated too strongly.  It is essential that they be observed whenever they are given and so should only be given when it is clearly possible for them to be honoured. Reliance upon undertakings is a key to the smooth running of many legal matters, as is the ability of firms to be able to take for granted that if an undertaking is given by a solicitor it will, at the appropriate time, be honoured.

However, with the growth of alternative providers of legal services, and with those other than solicitors involved in the legal process, will so much reliance be able to be placed upon undertakings in the future? What, for example, should solicitors do if undertakings given by non-lawyers are subsequently broken? To what extent should solicitors be prepared to rely upon an undertaking from a non-lawyer when there is a potential for detriment to the client?

Here we look at some of the issues that solicitors should bear in mind when giving and receiving undertakings and in particular of where they should be wary of accepting undertakings from non-solicitor legal providers.

What is an undertaking?

Before we can begin to answer these questions, we should be clear about what we mean by the term “undertaking”. The Glossary to the SRA Standards and Regulations 2019 defines a solicitors’ undertaking as:

“a statement, given orally or in writing, whether or not it includes the word ‘undertake’ or ‘undertaking’, to someone who reasonably places reliance on it, that you or a third party will do something or cause something to be done, or refrain from doing something.”

and paragraph 1.3 of both the Code of Conduct for Solicitors, RELs and RFLs (‘the Code for Individuals’) and of the Code of Conduct for Firms (‘the Code for Firms’) provide that as regulated persons, solicitors must “perform all undertakings given by [them], and do so within an agreed timescale or if no timescale has been agreed then within a reasonable amount of time”.

An undertaking, therefore, is far more than a statement of intent.  It is a binding promise that can, if not observed, lead to disciplinary sanctions.  It is more than just “I will do my best”.  It is “I will do this, come what may”.  It is an unequivocal declaration of intention.  Moreover, it does not need to include the words “undertake” or “undertaking”.  Even a simple oral promise given by a solicitor could, in certain circumstances, be regarded as an undertaking and where there is ambiguity, this will normally be resolved in favour of the recipient of that undertaking (see for example Templeton Insurance Ltd v Penningtons Solicitors LLP [2006] EWHC 685 (Ch)).

Giving an Undertaking

So, what should you be bearing in mind in relation to the giving of undertakings?  Back in 2009, the Solicitors Regulation Authority (SRA) produced a Warning Card in relation to undertakings and the recommendations it contained are as valid today as they were then.  They recommended that undertakings be:

1. Specific – as to action, timescale, who is giving it, to whom it is given;
2. Measurable – in other words there are agreed steps or outcomes that will demonstrate when the undertaking has been performed;
3. Agreed – in a form that both parties are happy with;
4. Realistic – concerns something that is capable of being achieved – for example is not dependent upon the actions of a third party over which the giver of the undertaking has no control;
5. Timed – when they will come to an end – either by the effluxion of time or the performance of a given act.

and that a solicitor should ensure that their client’s position was protected and that they themselves are not exposed to a breach.

They went on to recommend 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.

In other words, firms should always ensure:

• that undertakings (other than, perhaps, standard form undertakings used in conveyancing transactions) are only ever given by partners, directors or, possibly, senior managers;
• that the firm maintains records of what undertakings have been given and by whom;
• that all staff be trained on the giving of undertakings and especially on the dangers of the unintended undertaking.

In addition, those giving undertakings should give thought to issues which include:

• ensuring that the undertaking is unambiguous – an ambiguous undertaking is likely to be construed in favour of the recipient;
• expressing the undertaking as being given for consideration since if the consideration fails then the undertaking will be discharged;
• the ongoing liability for the undertaking – even if given by an employee – and the fact that a partner in a firm (although not a director unless they personally gave the undertaking) will remain liable for the undertaking even after he or she leaves the firm or the partnership is dissolved;
• the fact that an employed solicitor will be personally liable for an undertaking even if the employer ceases to trade.

The receipt of undertakings

A fundamental point which should always be borne in mind is that neither the law nor regulation places a duty upon a solicitor to accept an undertaking that is offered.  The nature of the undertaking, the identity/capacity of the person offering the undertaking and the interests of the client must always be borne in mind before an undertaking is accepted.

When accepting an undertaking, you should not be blasé about the wording and content or regard the exercise as merely a mechanical one that just forms part of a process.  Instead before accepting the undertaking you should:

• check the wording and nature of the obligation set out in the undertaking and ensure that it does what they require it to do and that it is clear and unambiguous;
• check any times by which the undertaking should be performed – for example, is there a timescale or is it completely open-ended? This could be a problem if you are subject to time constraints – for example registering a purchase;
• verify the identity and other relevant factors of the person offering the undertaking – are they likely to have authority to give it?
• consider the extent to which the person giving the undertaking would be able to make good the undertaking in the event that a third-party reagued on their part of the undertaking. This might be particularly the case when dealing with freelance solicitors or solicitors working in non-regulated organisations;
• in conveyancing transactions, ensure that any undertakings that have been provided can be relied upon before committing a client to a related transaction;
• in litigation, if you are offered an undertaking in relation to the payment of costs, make sure that those costs will be payable in any event otherwise the undertaking will likely be discharged were the matter not to proceed.

Do bear in mind at all times that failing to check the undertakings you are given may not simply be inconvenient, it may leave you open to being found liable in negligence to your client.

In particular, you must be sure that the person giving an undertaking upon which you need to rely is someone who can be compelled to honour that undertaking should the need arise.  This is a particular problem when dealing with unregulated firms or non-lawyer entities.

Some non-solicitors are bound by rules which require them to observe undertakings.  Thus, licensed conveyancers are bound by Principle 2(e) of the Licensed Conveyancers Code of Conduct which provides that a licensed conveyancer must comply fully with any undertaking given by them and which provides in the Undertakings Code, inter alia, that:

“8. All Managers are equally responsible for the performance of undertakings given in a body’s name and remain responsible for their performance even after they have left the body or it has been dissolved.

9. You do not breach an undertaking. Only the person entitled to the benefit of the undertaking or the Court may release you/the body from an undertaking.
10. You do not avoid liability on an undertaking by asserting that to comply with it would be a breach of duty owed to the Client.
11. Where you have given an undertaking to redeem a mortgage or charge you redeem it immediately following completion of the transaction occasioning the redemption.
12. In an undertaking to pay money out of the proceeds of sale of a property it is not implied that the undertaking is intended to take effect only if you receive the proceeds of sale”.

Similarly, barristers are subject to duties in relation to undertakings.  The Bar Standards Board Handbook provides at rC11 that “You must within an agreed timescale or within a reasonable period of time comply with any undertaking you give in the course of conducting litigation” and the Bar Standards Board state in their guide to undertakings for barristers (https://www.barcouncilethics.co.uk/wp-content/uploads/2017/10/Undertakings-4.pdf) that a barrister will be obliged by the Core Duties under the BSB Handbook “to comply with any other professional undertaking that you give as a barrister within any agreed timescale or within a reasonable time”.

Likewise, notaries are subject to the Faculty Office Code of Practice which provides at Practice Rule 13 that “You are personally liable for any undertaking given as a notary whether oral or in writing” and which goes on to provide at Practice Rule 13.1 “If an undertaking is not performed this will constitute Notarial Misconduct unless there are exceptional circumstances”.

However, the provisions relating to undertakings that affect members of CILEx are a little different.  They state that “Undertakings are given on behalf of the firm and not an individual. You should only give an undertaking if you are duly authorised by your firm to do so. If you are so authorised, you must ensure you comply with any procedures your firm has in relation to undertakings”.  The CILEx Code of Conduct does not specifically refer to undertakings although were one to be given, it could possibly be argued that Principle 2 “maintain high standards of professional and personal conduct and justify public trust in you, your profession and the provision of legal services” and Principle 3 “behave with honesty and integrity” could result in professional disciplinary sanctions being taken if an undertaking were not observed.

These aside, it is essential, therefore, that if you are dealing with a non-SRA regulated person or firm you should be extremely wary of accepting an undertaking.  This is especially so where you are yourself needing to give an undertaking which could be based to some extent upon the need for an undertaking to you to be honoured.  If you are in a position of needing to give an undertaking think carefully about the wording. Consider making the undertaking conditional upon the happening of the other undertaking or simply use a best endeavours statement and make it clear that it is not an undertaking.

Check that a person giving you an undertaking has the authority to do so within their organisation.  If the person is a non-solicitor employee then the undertaking may cease to be effective if their employer goes out of business – even if they are a solicitor enforcing the undertaking may prove impossible if the business no longer exists.

Enforcing an undertaking

Finally, just a brief word on enforcing undertakings.

Clearly if an undertaking is given by an unregulated person and there is no underlying contract behind it and no attempt to be fraudulent then there is probably not a great deal you can do to compel the giver to make good on it.

If there is an underlying contract, then it may be possible to be enforce the undertaking by commencing legal proceedings.  An example of this might be in contract where there has been consideration for the promise given by way of the undertaking.

However, if the person giving the undertaking is a regulated solicitor then you may be able to apply to the court to exercise its inherent supervisory jurisdiction in relation to the conduct of solicitors (see section 50 of the Solicitors Act 1974) so as to enforce the undertaking.

Failing that you could make a complaint of professional misconduct to the SRA.  Whilst this might result in disciplinary action being taken it will not of itself result in an order for the undertaking to be performed or for compensation to be paid for that failure.

How Can Infolegal Assist?

If you would like us to provide training to your personnel on undertakings and their importance then please contact duncanfinlyson@infolegal.co.uk to discuss your requirements.  Alternatively, subscribers to the Infolegal Compliance Hub can download the comprehensive “Undertakings Factsheet” from the Infolegal Compliance Hub and will shortly be able to allow all staff members to view the undertakings training module.