Page 274 - IOM Law Society Rules Book

ADVOCATES ACCOUNTS RULES 2008

Rule 27 – Contracting out

(1) In appropriate circumstances a client and his or her advocate may by a written
agreement come to a different arrangement as to the matters dealt with in rule 24 (payment of
interest).

(2) An advocate acting as a stakeholder may, by a written agreement with his or her own
client and the other party to the transaction, come to a different arrangement as to the matters
dealt with in rule 24.

Notes
(i) Advocates should act fairly towards their clients and provide sufficient information to
enable them to give informed consent if it is felt appropriate to depart from the interest
provisions. Whether it is appropriate to contract out depends on all the circumstances,
for example, the size of the sum involved or the nature or status or bargaining position
of the client. It might, for instance, be appropriate to contract out by standard terms of
business if the client is a substantial commercial entity and the interest involved is
modest in relation to the size of the transaction. The larger the sum of interest
involved, the more there would be an onus on the advocate to show that a client who
had accepted a contracting out provision was properly informed and had been treated
fairly. Contracting out is never appropriate if it is against the client’s interests.
(ii) In principle, an advocate--stakeholder is entitled to make a reasonable charge to the
client for acting as stakeholder in the client’s matter.
(iii) Alternatively, it may be appropriate to include a special provision in the contract that the
advocate-stakeholder retains the interest on the deposit to cover his or her charges for
acting as stakeholder. This is only acceptable if it will provide a fair and reasonable
payment for the work and risk involved in holding a stake. The contract could stipulate
a maximum charge, with any interest earned above that figure being paid to the
recipient of the stake.
(iv) Any right to charge the client, or to stipulate for a charge which may fall on the client,
would be excluded by, for instance, a prior agreement with the client for a fixed fee for
the client’s matter, or for an estimated fee which cannot be varied upwards in the
absence of special circumstances. It is therefore not normal practice for a stakeholder
in conveyancing transactions to receive a separate payment for holding the stake.
(v) An advocate-stakeholder who seeks an agreement to exclude the operation of rule 26
should be particularly careful not to take unfair advantage either of the client, or of the
other party if unrepresented.
(vi) Any breach by an advocate of a written agreement contracting out of rule 24 is also a
breach of the rules.

Rule 28 – Interest certificates

Without prejudice to any other remedy:

(a) any client, including one of joint clients, or a person funding all or part of an
advocate’s fees, may apply to the Council for a certificate as to whether or not
interest, or a sum in lieu of interest, should have been paid and, if so, the
amount; and

(b) if the Council certifies that interest, or a sum in lieu of interest, should have
been paid, an advocate must pay the certified sum.

Rule 28 – Interest certificates page 31