Undertaking to Protect an Unpaid Account

Pursuant to rule 7.2-11 of lawyers’ Rules of Professional Conduct (lawyers’ Rules) and subrule 2.02(1) of the Paralegal Rules of Conduct (Paralegal Rules), lawyers and paralegals must not give an undertaking that cannot be fulfilled and must fulfill every undertaking given.  

In some cases, a successor lawyer or paralegal will be asked to provide a broadly worded undertaking to protect the previous lawyer's or paralegal's account. When this occurs, the successor lawyer or paralegal should proceed cautiously as such an undertaking gives no indication as to what the successor lawyer or paralegal is actually undertaking to do.

For example, if the client is expected to receive settlement funds in the future, is the protected account to be paid out of any funds you receive in trust? What if the funds received in trust are not sufficient to satisfy the outstanding account? What if the client does not receive any funds? What if you or the client terminate the retainer before settlement funds are received? What if you receive settlement funds but the client later instructs you not to pay the outstanding account? Are you personally liable to pay the outstanding account that you gave an undertaking to protect?

Undertakings regarding unpaid accounts are given for the protection of the previous lawyer or paralegal, not for the debtor client. In determining whether to undertake to protect an outstanding lawyer’s or paralegal’s account, you must comply with the undertaking requirements contained of the lawyers’ Rules or Paralegal Rules and should employ the same best practices that apply to dealing with undertakings generally.

Additional Resources:

Overview of Undertakings and Trust Conditions