What is Independent Legal Advice?
Independent legal advice is when a lawyer or other qualified person gives advice, in his/her professional capacity, to someone who has a legal right or legal obligation and/or is or may become part of any current or future legal transaction.
The purpose of obtaining independent legal advice is to provide information to allow one or more parties to make an informed decision. This can take many forms. For example, a solicitor or other qualified person may advise on:
a) how best to deal with an issue;
b) the cost of the legal claim;
c) what should be contained in any documents; and/or
d) what legal issues may arise .
In cases where there is an existing legal document there is the ability to obtain independent legal advice and, amongst other things, to obtain an explanation of the contents of the legal document, ask questions about the document, and check that the document reflects what the client wants.
It is also common for independent legal advice to be given in circumstances where a legal right or legal obligation is created or given, such as in the making of a Will. Independent legal advice will be a stated requirement of many legal documents such as Powers of Attorney and Financial Agreements (also known as Binding Financial Agreements). It is important that the independent legal advice is not only comprehensive but is also contemporaneously documented.
The Importance of Independent Legal Advice
In many cases, obtaining independent legal advice is mandatory or strongly recommended by law. At its core, independent legal advice is meant to give you fair warning about any legal risks – with regard to any decision or transaction in which you may be involved.
The opposite of conditional or independent legal advice is legal advice from someone who you have a vested interest with or in. In other words, if someone else is paying for your legal advice or if they will benefit in some way from the advice you receive, then it is likely that you are receiving conditional legal advice (e.g., some one is paying for your legal advice) or it is conflicted legal advice (if someone else will benefit from the decision).
Independent legal advice can also help you to avoid situations where you are a willing participant in or know about a fraud of some kind. If somebody is going to do something and you have to consent or agree to it, independent legal advice is necessary to ensure you’re not participating in the fraud, even if you don’t know about it. If you don’t seek independent legal advice, you may be seen as complicity in the fraud.
If the transaction or decision you are part of is really complex and has a number of complicated issues associated with it, you will need independent legal advice. For instance, a very difficult family law circumstance may be complex, involve multiple jurisdictions, may have international elements to it and so it is extremely important to receive independent legal advice.
A lot of business transactions require you to get independent legal advice. For instance, if you sell a business or sell a piece of land and need to get financing of some sort or you’re entering into a guarantee of some sort, receive independent legal advice.
One of the most common misconceptions is that if you get conflicting legal advice or conditional legal advice, you don’t have to get independent legal advice. That is incorrect.
Bypassing independent legal advice can backfire, when you least expect it. We’ve seen clients in the past sign documents that they never should have signed. Once you’ve put the signature on the document, you cannot go back. The damage is done. You are now subject to the terms you have signed even if they’re not in your best interests.
You have to see things from the perspective of a judge or tribunal as to whether the independent legal advice that you received was sufficient or not. Was the advice adequate? Did you go in blindly or did you get something that was adequate? Ask yourself the following questions:
How to Get Independent Legal Advice
In general, in the case of a dispute, one or both parties may suggest that they need ILA, that is independent legal advice on the agreement(s) that they are entering into because they are having a "fight" and that fight relates to the very agreement that they are about to enter into. In these situations, it is not for the lawyer to say no, you do not need ILA, the parties are fighting, and therefore there should be no signing of agreements, there needs to be some more water under the bridge before the agreements are signed.
Yes, that is right. The lawyer that you chose to select should never refuse to give independent legal advice if you have asked for it, regardless as to what he or she may think about the need for it.
It is not the lawyer’s position to opine on whether the client or one of the clients needs ILA, it is the right of the client to request it and the position of the lawyer to give it, if requested.
There is an undisputed right of the client to spend the money required to obtain independent legal advice, so the lawyer should not refuse to take that retainer, or that money, and issue the advice, even if the lawyer personally believes that that is not the "right" decision.
The party requesting ILA, that is the independent legal advice, will usually contact a lawyer, in this particular case the lawyer is a family law lawyer.
The client will clearly explain the reason for the call:
- The party may be retained, that means paying the lawyer a retainer or a flat fee for a certain amount of work.
- The party may be un-retained, meaning they only pay for an hour of the lawyer’s time, or they may have relationship specific payments to the lawyer.
- The lawyer then books an appointment for the client.
- The client comes in and the lawyer listens.
- The lawyer explains the situation, puts the client "on notice" about the need for ILA.
- There will be some further discussion and explanation of the roles of the lawyer, the parties and certainly the other professionals involved, including the financial advisors and the marriage coaches.
- The client then moves towards retaining the lawyer to give the advice.
- There will be initial meetings with the lawyer and the business partner and the family members who are concerned and the lawyer will gather further information.
- Next steps include further appointments with the lawyer and the other professionals.
- Finally, the lawyer will review the contract, advise the party and give them the recommendations and justifications.
There can be significant time involved in the obtaining of the ILA, for all the reasons mentioned.
When You Need Independent Legal Advice
Common scenarios in which Independent Legal Advice is required:
Property Transactions
– If the transaction has legal implications, you should be independently informed of them.
All Real Estate Agent Agreements
– You should have an independent third-party review any Exclusive Offers and Representation Agreement (also known as Buyer Representation Contracts) or Exclusive Service Agreements (also known as Seller Representation Contracts) that you have with a real estate agent.
Signing Contracts
– To be legally binding , acknowledge and enforceable, not just all parties need to review a contract, all parties must also understand it.
Filling In Disputes
– An individual not affiliated with the parties needs to review the settlement terms and conditions to ensure full understanding and acceptance.
Legal Costs and Fees Explained
The fees associated with obtaining independent legal advice will depend on the complexity of the matter and the particular lawyer you choose. It is not unusual for a complex matter to require hours of a lawyer’s time. This would be rare for most individuals seeking general independent legal advice on a small contract, or for the advice needed to complete a contract form document. While it is appropriate for your lawyer to charge for this time, again, consult with your lawyer on a fair fee and hourly billing practices.
It is also extremely important to understand your lawyer’s fees include any disbursements they are charged by any third parties, such as the Land Title Office, court house, registry, and so on. Disbursements are necessary out-of-pocket costs incurred by your lawyer in the process of providing you with the independent legal advice.
Finding the Right Legal Advisor
It’s imperative to choose the right legal professional to provide independent legal advice. The following guidelines will help:
First, it’s important that the person providing independent legal advice be a lawyer; though, not all lawyers can provide independent legal advice as per the law society rules in each province/territory. It also absolutely must be someone who has experience in providing independent legal advice in the area relevant to the subject matter of the advice sought . This means that if you need legal advice with a real estate or mortgage transaction, you should choose a lawyer who provides independent legal advice in his/her legal practice on a regular basis and has a reputation in the area of real estate and mortgage transactions. Unfortunately, there are lawyers out there who are either unaware or don’t think it’s that important. Part of the experience factor is that a lawyer needs to understand the legal processes involved in the transaction so that he/she can explain the possible outcomes for each of the options available to you. It’s not enough for your lawyer to simply look up the law in a textbook or online.