Protecting the Estate's Interests: The Need for Independent Legal Advice for Executors

Introduction

In Hall v Hall [2023] WASC 342, Christopher Hall brought proceedings against his brother Michael Hall in Michael's capacity as executor of their mother Alwyn's estate, and in Michael's personal capacity.

An issue arose as to whether the firm acting for Michael in both capacities, Taylor Smart, owed potentially conflicting duties to him in those different capacities.

Facts

Michael was appointed executor of Alwyn's estate, which was valued at over $9 million ([31]).

Christopher sought various orders requiring Michael as executor to take action against Michael personally relating to loans, property improvements and unpaid rent ([35]-[37]).

Michael opposed the orders sought ([39]).

Taylor Smart (lawyers) acted for Michael as executor and personally, filing affidavits and submissions without distinguishing his capacities ([65]).

The court noted Taylor Smart had prepared Alwyn's will and power of attorney ([65]), and there was no evidence Michael as executor had independent advice about potential claims against Michael personally ([68]-[69]).

Analysis

In Hall v Hall, Howard J considered Taylor Smart's representation of Michael in his personal and executor capacities gave rise to a potential conflict of duties ([66]).

His Honour stated it was "imprudent, at the least" for Taylor Smart to act for Michael in these potentially conflicting capacities without distinguishing between them ([70]).

The court has a supervisory role over its officers to ensure the administration of justice, which includes ensuring solicitors avoid acting where there are conflicting duties.

Michael as executor was entitled to be advised independently about potential claims against Michael personally ([68]-[69]).

Michael ought to consider his positions and obligations as executor and personally, and obtain independent advice, given the potential conflict ([74]).

The court refrained from making any order at that time, but considered it sufficient to raise the obvious matter ([75]).

The 'Monumental' Costs of Large-Scale Litigation: Insights from the Santos-Fluor Dispute

A recent case in the Supreme Court of Queensland between Santos Limited and Fluor Australia Pty Ltd (Santos Limited v Fluor Australia Pty Ltd & Anor [2023] QSC 77) provides a clear picture of the financial scale associated with large-scale litigation.

The case centres around a dispute over alleged overpayments made by Santos to Fluor during a coal-seam gas project construction between 2011 and 2014.

Santos alleges overpayments to Fluor. Before initiating proceedings, Santos conducted a year-long investigation into these alleged overpayments​.

The court referred questions arising on pleadings to 3 referees. Hearings were heard before the referees between November 2021 and August 2022. The referees submitted a draft report on 7 March 2023 and allowed parties to make further written and oral submissions in April 2023​.

The sheer magnitude of this litigation is evident in the resources invested. Santos reported expending over 120,000 solicitor hours, $36.5 million in expert fees, $21 million in counsel fees, and $2.5 million in other costs. The scale of the litigation extended beyond financials, with the parties disclosing over 5.7 million documents, 14 experts producing 81 expert reports, and 90 lay witnesses providing 178 witness statements.

The Judge noted that the parties are “engaged in litigation on a monumental scale”, marked by numerous interlocutory disputes and appeals.

The Defendants applied to stay the conduct of the reference (to the Referees) until further order, presumably until the hearing and determination of the substantive application. In his reasons given for dismissing the application, the Judge stated that the costs associated with finalising the referee report were likely to be "relatively insignificant in the scheme of this litigation."

The Santos-Fluor dispute underscores the complexity and cost that can be associated with litigating large resource and infrastructure projects. As this case continues to unfold, it serves as a stark reminder of the potential financial implications of such large-scale disputes.

Understanding When a Lawyer Can Be Prevented from Acting in a Case

Legal professionals are bound by a set of ethical rules that guide their conduct in various scenarios. A situation that often presents a challenge is determining the circumstances under which a lawyer can be restrained from acting in a particular case.

This blog post sheds light on this subject using references from precedent cases and legislation.

A fundamental concept to understand is the duty of confidentiality. This principle, as outlined in the case of Prince Jefri Bolkiah v KPMG [1999] 2 AC 222, stipulates that a lawyer is obliged to protect any confidential information provided by a client.

A lack of recollection about an earlier matter does not exempt a lawyer from this duty. It has been suggested, as in Yunghanns v Elfic Ltd (Unreported, VSC, 3 July 1998), that this confidential information could even extend to the general knowledge a lawyer gains about a client during their professional relationship, although this is rare.

The courts also possess inherent jurisdiction to prevent a solicitor from acting in a case if doing so could undermine the administration of justice. This principle, illustrated in cases like D & J Constructions and Mallesons, is rooted in the concern that public confidence in the justice system could be damaged if a lawyer is perceived to switch sides easily.

Another factor is the fiduciary duty of loyalty a lawyer owes to a former client, even after the end of their professional relationship. However, there is conflicting legal opinion on whether this duty persists after the termination of the retainer. The primary concern here is to avoid any real risk of a breach of confidence or any action that could jeopardize the judicial process.

The 1882 case Mills v Day Dawn Block Gold Mining Co Ltd dealt with the issue of proving the existence of confidence. The court decided that if a dispute arises between a solicitor and a former client over whether confidential information was shared, it's inappropriate to demand to know what the confidence was, as it could expose the client to the very harm they're trying to avoid.

In summary, a court may prevent a lawyer from acting in a case if there's a risk of breaching confidentiality, undermining the administration of justice, or violating a potential continuing duty of loyalty. The nature of the relationship between the lawyer and the client, the type and scope of the confidential information, and the potential for misuse of such information are all factors that the court will consider.

"Plan Continuation Bias": A template letter to provide clients

Plan Continuation Bias is a cognitive bias, a psychological phenomenon that impacts our decision-making process.

It is the inherent tendency to continue with an initial plan or strategy, even in the face of new information or changing circumstances that suggest the plan may no longer be the best course of action.

This bias has been observed in numerous fields, from aviation and healthcare to finance and law, and it can significantly impact the outcomes of our decisions.

In its essence, Plan Continuation Bias is about being overly committed to an initial plan, to the extent that it can lead to ignoring important new information or overlooking better options.

It is fueled by a human preference for consistency and a resistance to change, especially when we have invested time, energy, and resources into a particular plan or strategy.

The origins of Plan Continuation Bias lie in our brain's natural desire for cognitive ease. Our brains favour routines and predictability as they help us navigate the world efficiently.

However, this efficiency can become a liability when the circumstances change, and our brains, favouring the initial plan, may fail to adapt quickly enough.

There are a number of reasons why people might fall victim to plan continuation bias, including:

1. It can be difficult to admit that we were wrong or that our original plan was not the best one.

2. We may have already invested a lot of time, effort, or money into the plan, and we don't want to give up on it now.

3. We may simply be afraid of change or the unknown.

In the context of legal proceedings, Plan Continuation Bias can become particularly problematic.

Lawyers and their clients might become overly committed to an initial legal strategy, finding it difficult to pivot or adapt when new evidence is introduced or when the landscape of the case changes. This can lead to missed opportunities for negotiation, settlement, or other advantageous pathways.

Understanding and recognizing Plan Continuation Bias can help us make better decisions, particularly in complex and dynamic situations such as legal cases. It encourages us to remain flexible, to regularly reassess our strategies, and to remain open to new information and perspectives.

The following template letter, designed for use at the beginning of a legal retainer, outlines the concept of Plan Continuation Bias and suggests ways in which lawyers and clients can work together to mitigate its potential impact on their case.

By being aware of this bias, we can strive to make the most effective decisions, always keeping the client's best interests at the forefront.

Template letter

Dear [Client's Name],

I am writing to you at the onset of your retainer of my law practice, to discuss a common cognitive phenomenon which impacts the decision-making process during the course of legal cases: Plan Continuation Bias.

Plan Continuation Bias is a cognitive bias that has been recognised across multiple disciplines, including psychology and behavioural economics.

It is the tendency for individuals or groups to continue with a set plan or course of action, even when new information or changed circumstances suggest that the original plan is no longer optimal or even viable.

This bias can emerge in any decision-making context, including in legal proceedings.

In the legal arena, Plan Continuation Bias may manifest in various ways. For example, we may become attached to our initial legal strategy and find it challenging to adapt when new evidence arises or circumstances change. In the context of settlement negotiations, we may become entrenched in our initial expectations about what a fair settlement would look like and could overlook potentially beneficial opportunities for compromise.

As we embark on this journey together, it is crucial that we are aware of and actively work to counteract Plan Continuation Bias. Here are a few steps we can take:

1. Embrace Flexibility: Let's remain open to reconsidering our strategy as the case progresses. While it is important to have a plan, we should not become so attached to it that we overlook better options or fail to adapt to changing circumstances.

2. Regular Reassessment: Throughout the case, let's make it a point to reassess our strategic decisions at regular intervals. This will ensure that we are not blindly following a preset plan and are incorporating new information as it becomes available.

3. Open Communication: Always feel free to share your thoughts, concerns, and new information you may come across. Open and honest communication can help us avoid becoming too anchored to our initial expectations.

4. Objective Analysis: We will make every effort to objectively analyze the strengths and weaknesses of our case, as well as the risks and benefits associated with various strategies. This includes regularly reassessing our position in any settlement negotiations.

5. Engage in "Devil's Advocacy": Occasionally, we will need to play the "devil's advocate" to challenge our assumptions and explore different perspectives. This can help us avoid falling into the trap of Plan Continuation Bias.

Our shared goal is to ensure the best possible outcome for your case. I believe that by being aware of, and actively working to mitigate, Plan Continuation Bias, we can make more effective decisions that align with this goal. I look forward to our collaboration in this endeavour.

If you have any questions or require further clarification on this or any other aspect of your case, please do not hesitate to let me know.

Best regards,

[Lawyer]

Navigating Uncertainty: The Role of Computational Irreducibility in Legal Practice

• This article explores the concept of "computational irreducibility" and its impact on legal practice.

• It draws parallels between legal cases and complex systems like chess, where outcomes are difficult to predict.

• It emphasises the importance of flexibility and preparedness in legal strategies due to inherent unpredictability.

"Computational irreducibility" is a concept from the field of cellular automata and more broadly from the study of complex systems, first introduced by scientist Stephen Wolfram in his book "A New Kind of Science."

In essence:

• Computational irreducibility suggests that for some processes, the only way to know the outcome is to perform the computation itself – there are no "shortcuts" or simpler ways to predict the result.

• This is in contrast to "computational reducibility," where one can predict outcomes without having to simulate or perform the entire process.

• In certain systems, despite knowing all the rules and initial conditions, the only way to predict the final outcome is to actually carry out the entire process. There's no shortcut, no formula that can give you the answer without going through each step.

For example, in a game of chess, despite the game's rules being quite simple, the number of potential games is SO LARGE, that there's no feasible way to predict the outcome of a game without actually playing it out – each game of chess is computationally irreducible.

The number of possible chess games is so large that it is difficult to comprehend. It has been estimated that there are more possible chess games than there are atoms in the universe. This is because there are so many different ways that the pieces can be moved and so many different possible outcomes.

There are 16 possible moves for the first move in chess. After the first move, there are 32 possible moves for the second move, and so on. This means that there are 16 * 32 * 32 * ... * 32 = 10^43 possible chess games after 64 moves!

I’ve been thinking about this concept "computational irreducibility" for years, and I began thinking about it again after seeing this YouTube video of a conversation between Lex Fridman and Stephen Wolfram:

Life in an illusion: The fabric of reality is constantly being rewritten | Stephen Wolfram

The whole clip is fascinating and worth watching (many times).

At 3:28 mins, Stephen Wolfram says:

… where everything in the world is full of computational irreducibility we never know what's going to happen next the only way we can figure out what's going to happen next is just let the system run and see what happens …

The concept of computational irreducibility has significant implications in fields like physics, computer science, and philosophy. For instance, if the universe is computationally irreducible, as Wolfram suggests, then it means that even with a complete understanding of physical laws, there may be no way to predict certain phenomena without simulating the entire history of the universe up to that point.

The concepts also applies in other, less scientific-based fields.

For me, the idea rings true in the legal profession.

When a client approaches us at the outset of a legal dispute, they often seek reassurance and clarity about how the case might unfold.

While we can provide them with our insights based on our experience and understanding of the law, the reality is that each legal case is a complex system, much like a game of chess.

We're dealing with a myriad of variables - evolving evidence, human emotions, changing laws, judicial discretion, and so much more.

This mindset becomes increasingly relevant as the world becomes more complex.

It's tempting to think that with enough expertise, we can predict the outcome of a case before it reaches trial. However, the concept of computational irreducibility reminds us that the only surefire way to see the result is to go through the process itself - every negotiation, every application, every piece of discovery, every testimony.

This doesn't mean we can't provide valuable advice or make educated predictions.

What it does highlight is the importance of preparing for a range of potential outcomes and staying agile in our strategies.

In the world of law, as in complex computational systems, “sometimes the journey is the only way to the destination” (Ralph Waldo Emerson).