Client Intake: Know Your Client—Or Else
In his Professional Responsibility column, Anthony E. Davis discusses two cases while exploring an issue critical to lawyers' and law firms' professional and business interests: What information about a new client does a lawyer need to obtain in order to make sensible decisions about whether or not to proceed?
July 04, 2017 at 12:00 AM
8 minute read
This article explores a subject that is only tangentially related to the Rules of Professional Conduct (unless a conflict of interest is involved), but which is central and critical to lawyers' and law firms' professional and business interests: What information about a new client does a lawyer need to obtain in order to make sensible decisions about whether or not to proceed? Two recent cases, one from New York and one from the U.K., have important lessons for lawyers, wherever they practice.
'P&P Property'
In reviewing the English case, P&P Property v. Owen White & Catlin, 2016 WL 05484797 (UK High Ct. of Justice, Chancery Div. 2016), it is important to note that English lawyers operate within a regulatory framework that requires them to undertake detailed “know your client” investigations about prospective clients, based on U.K. anti-money laundering (AML) laws. In addition, if lawyers find that a prospective client may be seeking assistance to violate the AML laws, they are required to report their suspicions to the authorities—without regard to attorney-client confidentiality.
The Case: The purchaser of a London property sued the seller's attorneys after a fraudulent real estate transaction fell apart, alleging breach of warranty of authority, negligence and breach of trust and undertaking. The seller's attorney was contacted by the purported owner of unoccupied real property in London to sell the property. The seller contacted the attorney from Dubai, claiming that he, as seller, needed cash on an urgent basis to purchase a property in Dubai.
The attorney and seller met in person at the law firm's office in London. The seller presented a passport which the attorney later claimed contained a good likeness of the seller. To comply with the U.K. AML regulations, the law firm arranged for an anti-money laundering search for the seller , which came back marked as “referred”—meaning that further inquiry about the seller was required. The attorney requested and obtained additional information from the seller to confirm his identity and address, including bank statements and the completion of documents by a local Dubai solicitor all of which appeared to confirm the seller's identity.
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