A Plaza, a Deadline, and a Practice Outside Your Depth
Your practice is residential real estate and wills. Amrit, a long-standing will client, asks you to act on his $2.4M purchase of a small strip plaza with two tenants. You have never done a commercial purchase. You reply 'sure, same as always' and send no retainer letter. The offer, which Amrit signed before consulting you, contains a ten-business-day due diligence condition. You are in a three-day trial during the second week and diarise the condition expiry as Friday the 19th; it is actually Wednesday the 17th. Amrit's lender also needs estoppel certificates from both tenants, which you never request. On the 18th the vendor's lawyer confirms the agreement is firm. Amrit later learns the roof needs $180,000 in repairs.
1. What professional obligations are engaged, and where did the file go wrong?
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Four distinct duties, each breached at a different point.
Competence. You may take a matter outside your experience only if you can become competent without undue delay or risk, or by associating with or referring to someone who is competent. A tenanted commercial plaza involves leases, estoppel certificates, zoning, environmental risk and commercial financing - a different practice. 'Same as always' was not an assessment; it was an assumption.
Scope and retainer. There is no written retainer, so the scope defaults to the whole matter. A written retainer would have forced you to define what you were and were not doing, and to record Amrit's instructions about the condition.
Diligence. Diarising a critical date once, from memory, while in trial, is a systems failure. Critical dates should be double-diarised, calculated from the offer, and covered by a tickler system.
Communication. The lender's estoppel requirement was never addressed, and Amrit was never told the deal had firmed up until it was too late to do anything.
2. What must you do now about the missed date and the roof?
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Disclose, promptly and completely, and do not manage the news.
- Tell Amrit that the condition expired on the 17th, that you diarised it incorrectly, that the estoppel certificates were never requested, and what that means for his position. Do this before he hears it from the vendor or lender.
- Recommend independent legal advice about a possible negligence claim, and tell him he is entitled to retain another lawyer at your expense for that purpose. Do not negotiate a release with him yourself while acting for him.
- Consider whether you can continue. Where the client may have a claim against you arising from the same matter, the conflict usually requires you to stop acting, with his informed consent being a poor substitute. At minimum, get his written informed decision after independent advice.
- Notify your insurer now, in writing; do not wait for a demand.
- Attempt remediation that does not prejudice him: ask the vendor for an extension, ask the tenants for estoppels anyway, get a roof inspection.
Do not amend the diary or the file note to look better.
3. Amrit asks for a reduction and threatens a complaint if you bill him. Can you bill for the file, and what happens to the fees?
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You may bill for work properly and competently done, but a fee must be fair and reasonable in all the circumstances, and work that fell below the standard - or that had to be redone - should not be charged for.
Practically: write off the conveyancing and due diligence work on the condition, the estoppel step and anything connected to the roof issue. You can charge for work that genuinely benefited him, and you must give particulars, not a lump sum. Offer a clear credit rather than defending the full account.
Do not make release of the file conditional on payment of a disputed account. Deliver the file; if the account remains disputed, it can be assessed.
On the complaint: you cannot pay or discount solely to buy silence, and you must not ask him to withdraw a complaint as part of a settlement. A genuine, explained reduction is fine; a payment conditioned on silence is misconduct. Keep your notes, and cooperate if a complaint is made.