Capacity issues can create more than evidentiary problems in succession matters. They can affect who the solicitor is actually acting for, whether a retainer is valid, and whether fees will ever be recovered.
In succession matters, these issues often arise gradually and in messy factual contexts, making them easy to overlook until they become a problem.
We spoke with Daniela Pavlovic, Principal at Harwood Andrews, about where the real risks lie and what practitioners should be doing to protect themselves.
Q: At a practical level, when should alarm bells start ringing about capacity?
A: Usually when something feels off. That might be a client who is having difficulty with recall, a client in hospital or aged care, instructions that suddenly depart from long-held views, or a situation where family members are doing most of the talking. The key point is that solicitors should not wait for obvious incapacity. If there is a red flag, it needs to be explored. Capacity is presumed, but where doubts arise, a prudent solicitor should make further enquiries rather than simply pressing on.
Q: Why is identifying the client such an important part of the capacity analysis?
A: Because in practice the two issues often overlap. In succession matters, it is common to have multiple family members involved, or attorneys, guardians or other entities in the background. That can create ambiguity about who the solicitor actually represents and to whom the professional duties are owed. If one family member dominates the discussion, or if authority is assumed rather than checked, the solicitor can end up acting on instructions that are not properly the client’s at all. That is where conflict, ethical difficulty and later challenge can begin.
Q: What is the real risk if a solicitor enters into a retainer when capacity is uncertain?
A: The risk is not just theoretical. A retainer is contractual, so if the client did not have the relevant capacity when the costs agreement was entered into, the agreement may be void or unenforceable. That means the solicitor may struggle to recover costs. If the solicitor continues acting after capacity has been lost, the exposure increases further.
Q: If capacity is lost during the retainer, what should the solicitor be thinking about?
A: The first step is to pause and reassess the footing of the matter. Loss of capacity does not necessarily mean the retainer automatically ends, but it does raise immediate questions about whether the client can still provide instructions, whether capacity is fluctuating, and whether there is an attorney, administrator, guardian or litigation guardian who can properly step in. If there is no one able or willing to give lawful instructions, termination may be justified, but it needs to be done carefully, with just cause and reasonable notice. The solicitor also needs to consider the urgency of the matter and whether any interim steps are needed to protect the client’s position before coming off the record.
Q: So what practical steps can solicitors take to manage the risk before things unravel?
A: Capacity management should be built into the ordinary conduct of the file. That means identifying the relevant legal test for the particular task, asking open-ended questions, meeting the client alone where appropriate, keeping detailed contemporaneous notes, and expressly recording why the solicitor was satisfied the client had capacity for the task at hand. It also means having robust cost agreements, revisiting the retainer if circumstances change, and thinking ahead about whether funds should be held in trust to protect the costs position. Good process is not administrative overkill. It is often what saves the file later.
Q: How important is file management where a capacity dispute later emerges after death?
A: It is often critical. Once a dispute begins, the solicitor’s file can become central evidence. Attendance notes, the questions asked, who was present, whether the client was seen alone, the reasons for unusual instructions, and the steps taken to assess capacity may all be scrutinised. Capacity disputes after death are often driven by family conflict and disappointment as much as genuine concern about cognitive function. That is why detailed and disciplined file management during the client’s lifetime is so important. It protects the client’s wishes, but it also protects the solicitor’s position if the matter later ends up in court.
Keen to learn more?
Don’t miss Daniela Pavlovic’s upcoming session The Price of Capacity: What Happens When Clients Can’t Instruct, part of TEN’s 5 part webinar series High-Risk Estates: Litigation Triggers and How to Avoid Them.
