Solicitors who wish to charge their client’s property as security for their fees would be well served to read the recent decision of the NSW Supreme Court of Malouf v Constantinou [2017] NSWSC 92. The Court found that by seeking security in circumstances where the solicitor had detailed instructions as to the client’s financial position (from Family Law proceedings), he had breached his fiduciary duty by failing to obtain full informed consent from the client. The Court also held that the client had been unduly influenced to grant the security. In those circumstances, despite the settlement agreed to by the parties and in the absence of any pleadings and affidavits from the Defendants, the Court found the security provisions were invalid and unenforceable against the client and refused to make the declarations sought. If you need advice on how to avoid these pitfalls, Luke Fermanis (who appeared for Malouf) will be able to assist.
