The Law Society has recently released new guidance addressing the impact that climate change presents to the delivery of legal services. Solicitors should be aware of this changing landscape and its potential impact upon their organisations, as well as on the legal advice they provide.
What does the guidance address?
This April, the Law Society released its Guidance on the Impact of Climate Change on Solicitors, setting out advice for legal services organisations on how to manage their business in a manner which is consistent with the transition to net zero, and how climate-change related risks may be relevant to client advice and the fulfilment of solicitors’ professional duties.
Under laws set out by the Solicitors Regulation Authority (SRA), solicitors working on behalf of a client have a duty of care to provide a professional level of service and provide proper advice. The Law Society guidance suggests that risks relating to climate change should be included in this general obligation.
Within the guidance, climate-related risks are split into three categories:
- Physical risks – such as the impact of more severe and more frequent weather events on commercial and residential buildings, transport infrastructure, and business operations
- Transition risks – such as policy, legislative, regulatory and market changes to support a transition to a net zero economy, including mandatory reporting on carbon footprints
- Liability risks – legal liabilities for law firms, governments, and organisations from people or businesses seeking compensation for losses arising in relation to physical or transition risks, including the risks of being sued by those impacted by climate change
Climate-related risks will affect most clients and nearly all areas of legal practice. This includes real estate and asset-based transactions, such as the impact of flooding, fire, inaccessibility, and un-insurability risks on property ownership and use. Other notable practice areas affected by the guidance include corporate governance and risk management, disputes, commercial contracts, and human rights and social governance issues.
Impact on solicitors’ professional duties
The guidance released by the Law Society could have varying levels of impacts on solicitors and their professional obligations moving forward. Solicitors, under their main legal duties, are required to disclose to a client any risks of which they happen to become aware, where those risks may impact the client’s interests.
Law firms may also refuse to act for clients where those clients’ activities happen to hinder progress either towards their own climate change commitments conflict, or where there is an apparent conflict with the client organisation’s stated ethos on climate change. Where a firm decides not to accept an instruction, they should provide the reasoning to prospective clients in writing.
As set out by the Law Society, the main legal duties incumbent upon solicitors are as follows:
- Duty of care – a common legal obligation for solicitors is to use reasonable skill and care.
- Duty to warn – solicitors have a duty to warn a client about potential risks by pointing out hazards of a kind which should be obvious to the solicitor, but that the client may not understand.
- Duty to disclose – the responsibility to disclose to the client any facts relevant to the topic of which you have actual knowledge prevails when you act on a matter for a client. In respect of climate change, solicitors should communicate any climate legal risks that become apparent in a way that is both obvious and intelligible.
- Duty to uphold service and competence levels – solicitors must ensure they provide a consistent standard to their clients throughout and have competent knowledge which will enable them to practice in the most effective manner. If a line of work falls out of their beyond a solicitor’s personal capacity, this much be disclosed and expert or additional advice sought.
What is the impact on PII?
As Lubna Shuja, President of the Law Society, recently commented, “The effects of climate change – even on legal practices – are wide ranging and constantly evolving. Solicitors should be aware of this changing landscape and its potential impact upon their organisations, as well as on the legal advice they provide.”
We can expect the release of further material from the Law Society, who have committed to more sector-specific information. Ultimately, the profession will need to ensure that they are continually abreast of the ever-changing landscape with regards to climate change and how it may alter the advice they are providing for their clients, and impact upon them as organisation.
From a PII perspective, the insurer community is keeping a watching brief as things currently stand. In the short term, there will likely be a question or two introduced by some of the more astute insurers, effectively asking their insureds as to whether they are both aware and applying the Law Society guidance.
In the longer term, how the topic of advice linked to climate-related risks influences insurers will primarily rest upon future claims trends. Thus far, there has not been an alignment with claims of negligence. However, what the guidance has further supported amongst some in the insurer community, is the ever-increasing liability that is attached to the profession, which both firms and their insurers must navigate.
For further information, please visit our Lockton for Solicitors page, or contact:
Grace King, Client Services Associate
T: +44 207 933 1343
Stanley Barness, Client Services Associate
T: +44 207 933 1589