Conflicts of interest
As with other commercial matters, conflicts of interest can arise when employment lawyers accept instructions from clients or, indeed, during the course of the retainer.
- On a very basic level, a solicitor may despatch a letter before action on behalf of a new client to that client’s employer, only to later discover that the employer is an existing client of the firm (usually when another partner has received a telephone call of complaint). Whilst this may, on occasions, give rise to a commercial – rather than a legal – conflict of interest, the result will (at a minimum) be severe embarrassment for the firm. To avoid this type of problem, practitioners need to ensure that full conflict searches are completed before instructions are accepted and any advice is proffered to the prospective client.
- It is important to take care when advising a team of employees who wish to move to another employer. Often firms act for both the team and the prospective employer and must ensure that the prospective employer does not induce the team to breach their current contracts of employment, as this may have consequences for both the employer and for the firm. It is not advisable to use a member of the team as a team leader to negotiate the move with the prospective employer company and it may be appropriate for the prospective employer to use a headhunter and to negotiate the contract of each member of the team individually.
- Where accepting such a joint retainer on behalf of a prospective employer and a team of employees from another company, practitioners must also be aware of the potential competing interests between the team and the employer. The employer often pays the bill and may wish to control the instructions. Firms must, therefore, satisfy themselves that they can act responsibly in the best interests of both parties, without causing detriment to either. Consideration should also be given at the outset as to how any difficulties that may arise will be resolved.
- Similarly, a conflict may arise when a divergence of interest occurs during a discrimination case. An employer may give instructions to a firm of solicitors to defend an employee who has been accused by a fellow employee of discrimination in the workplace. If, at a later date, the employer instructs the solicitors to cease representing the employee, an actual conflict may arise and all parties must be advised immediately. Once again, consideration should be given at the outset to issues such as the conduct of the proceedings and how the interests of both clients will be protected should their interests diverge and independent advice be required.
Deadlines and time limits
Missing deadlines and time limits is an inherent risk in litigation, and employment law is no different. Failure to comply with the CPR and Employment Tribunal deadlines can, and frequently do, expose solicitors to wasted cost orders and negligence claims. It is vital that solicitors are aware of the specific time limits imposed by Employment Tribunals, which are far shorter than those for other civil claims.
- Claims for unfair dismissal, sex, race, disability etc. discrimination must normally be lodged within three calendar months of dismissal or of the act complained of.
- Claims for statutory redundancy payments must normally be lodged within six calendar months of dismissal.
- The Respondent’s Notice of Appearance (ET3) must be submitted within 28 days of the date of the ET1. It is advisable to check with the relevant Employment Tribunal exactly when the ET3 is due.
Whilst individual fee earners will maintain their own diary reminder systems, a centralised electronic diary system can also be set up to help avoid missing deadlines. This will, in practice, only be effective where entries are comprehensive, where the system can be accessed by all relevant personnel and where it is possible for someone else to identify an urgent issue and deal with it in the fee earner’s absence. Entries will typically include:
- the case name and number;
- which Employment Tribunal or court the case is assigned to;
- the scheduled date of the hearing; and
- any other relevant timetable dates or directions
Examples of the very serious consequences, for employment solicitors, of getting deadlines wrong can be found in case law. In one such case, The Wise Group v Mitchell [2005] UKEAT/0693/04/ILB, the EAT gave an illustrative example of when a claim could be brought against solicitors: an employee who has been with an employer for eleven months seeks her solicitor’s advice because she can no longer endure the bad treatment to which she is being subjected by her employer. The solicitor negligently advises that she can resign immediately and that this will amount to constructive unfair dismissal, allowing her to bring a claim for statutory unfair dismissal. If she relies on this advice and resigns immediately, she will not be able to bring a claim for unfair dismissal as she has not been employed for a period of a year. But for her solicitor’s advice, she would have stayed on for an extra month, enabling her to bring an unfair dismissal claim. Her subsequent claim for breach of contract against the solicitor is likely to include a claim for damages for the lost opportunity to claim unfair dismissal, following the loss of an accrued statutory right to do so.
The Employment Act 2002 (Dispute Resolution) Regulations 2004
To complicate matters further, since the introduction of The Employment Act 2002 (Dispute Resolution) Regulations 2004 (on 1 October 1 2004), there are automatic extensions of the time-limits set out above in certain situations, as well as an ability for the tribunal to exercise discretion to extend time. Solicitors therefore have to be very careful about advising in absolute terms on time limits, as the employee may, depending on the circumstances, be able to bring a claim outside the normal time limits.
Internal referrals
Owing to the specialist nature of employment law advice, solicitors are often called upon to give advice to clients by other departments in their firm. This gives rise to two practical points:
- practitioners should be wary of giving advice in a ‘vacuum’ or of being rushed into giving an answer. As a matter of practice, employment solicitors should always qualify their advice by reference to the level of background information provided and request such documentation as is necessary to enable proper consideration to be given to all relevant issues. “Shorthand” instructions via a solicitor from another department can ultimately lead to incomplete or incorrect advice;
- similarly, when providing advice to other departments, there is a risk that such advice may be misunderstood or miscommunicated to the client. It will, therefore, usually be appropriate for the advice to be confirmed in writing. In other cases, it will be appropriate or, indeed, necessary for the employment solicitor to meet with the client.
Technical developments and accurate advice
Employment law is a technical area and, whilst it is the responsibility of each individual solicitor to keep up to date with developments in case law and legislation, firms typically provide support to their fee earners through regular technical updates and training. The latter can, on occasions, usefully be extended to include other departments (e.g. corporate), so that their fee earners are able to identify the existence of an employment issue which requires specialist input.
Qualifying advice
Difficult issues often arise in the area of employment, requiring a detailed analysis and interpretation of the relevant statutory provisions and authorities. Whilst the fact that a solicitor’s view is not ultimately upheld does not, of itself, connote negligence, where the outcome of an issue is uncertain (for example, in relation to the enforceability of a restrictive covenant), the solicitor should take this into account in his advice and put the client in a position to make an informed decision as to the best way forward.
Practical points
- complete full conflict checks before any advice is provided in order to avoid costly and embarrassing conflicts of interest (whether legal or commercial)
- where acting for more than one client with common interests, be alert to conflicts of interest which may arise during the course of the retainer. Discuss how these might be resolved at the outset
- maintain an effective diary system, including centralised reminders where appropriate
- ensure that employment specialists have full instructions and adequate time in which to formulate their advice; do not proceed on the basis of “half baked” instructions from other members of the firm;
- employment law is a technical area; ensure that solicitors in other departments do not “dabble” in it
- qualify advice where appropriate
- confirm important advice in writing and retain notes of all meetings and discussions (including handwritten notes) on the file in order to reduce the scope for potentially damaging and costly conflicts of oral evidence.
This article first appeared in the Solicitors' risk awareness bulletin in November 2006. To view the full publication please click here.
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