It is not uncommon for law firms in Hong Kong to come across potential clients who refuse or are reluctant to disclose their identity due to fear of disclosing confidential information. While it is understandable that some clients wish to remain anonymous for commercial or tactical reasons, it should be emphasized that Hong Kong law firms can be trusted to maintain client confidentiality. Further, to comply with The Hong Kong Solicitors’ Guide to Professional Conduct and Guidelines on Anti-Money Laundering and Terrorist Financing, it is a must for a solicitor to know his client’s identity at the outset of the retainer.
DUTY OF CONFIDENTIALITY
A Hong Kong solicitor’s duty of confidentiality is fourfold. First, it is an implied contractual term of the retainer between solicitor and client that the solicitor is to keep his client’s information confidential (see Parry-Jones v The Law Society of England and Wales ). Second, there is a tortious duty of confidentiality on solicitors. Third, solicitors also owe an equitable duty of confidentiality to their clients, which is independent of the contractual and tortious duties.
A breach of any such duty gives rise to a client’s right to bring an action against their solicitors for damages and/or injunctive relief.
Further, solicitors have a professional duty to hold clients’ information strictly confidential. Principle 8.01 of the Hong Kong Solicitors’ Guide provides that, “A solicitor has a legal and professional duty to his client to hold in strict confidence all information concerning the business and affairs of his client acquired in the course of the professional relationship.” It further provides that a solicitor must not divulge such information unless the client has expressly or impliedly authorized him to do so, or he is otherwise required to disclose it by law. Commentary 4 to principle 8.01 provides that a solicitor owes such duty of confidentiality to every client without exception, and that this duty continues indefinitely even after cessation of the retainer. A solicitor who breaches the duty of confidentiality may face disciplinary action.
The duty of confidentiality is of paramount importance to the integrity of the judicial system and to public confidence in the legal profession. Without a client’s consent, a law firm cannot even disclose the fact that it is representing the client, let alone any other information that the client has disclosed to the law firm. Complaints against solicitors for breach of the duty of confidentiality are extremely rare, which suggests that solicitors abide by such duty and take it seriously.
CONFLICTS OF INTEREST
A law firm must know a client’s identity to enable it to carry out a conflict check to determine whether they can act for the client. Principle 9.01 of the Hong Kong Solicitors’ Guide lays down a clear mandatory duty on solicitors in this regard, namely, “A solicitor or firm of solicitors must not accept instructions to act for two or more clients where there is a conflict or a significant risk of conflict between the interests of those clients.”
In other words, if the law firm is already acting for a client and is asked to act for another client whose interests conflict, or appear likely to conflict, with those of the first client, the law firm must not accept instructions from the second client. That is why knowing a potential client’s identity is a must. Imagine a situation where, for example, a law firm has already accepted instructions to act for the plaintiff in court proceedings, and the defendant in those same proceedings calls the solicitors on an anonymous basis seeking preliminary legal advice. If the solicitors give such advice to the defendant, the solicitors will have breached their duty to avoid a conflict of interest and, as well as not being able to act for the defendant, would probably also need to cease acting for the plaintiff, who would then be put to the inconvenience and expense of instructing alternative solicitors.
Another reason why a potential client’s identity must be disclosed to his potential solicitor is the requirement for Hong Kong law firms to comply with the Anti-Money Laundering Guidelines, which can be found in Hong Kong Law Society Practice Direction P. This practice direction lays down stringent requirements for client identification and verification. As a basic requirement, law firms must make reasonable efforts to identify, and in some cases verify, the true identity of clients (both new or existing), and practice direction P sets out the recommended identification and verification procedures and policies. Verification involves reviewing reliable and independent source documents, data or information. For example, a solicitor, whenever possible, should inspect the identity card or passport of an individual, certificate of incorporation or registration of a company or other legal entity, for verification purposes.
Be honest not only to your doctors, but also to your lawyers! Hong Kong solicitors have long enjoyed a good reputation for professionalism. When a patient seeks medical advice, frank disclosure is necessary for proper diagnosis and treatment. Likewise, in order for a law firm to give appropriate legal advice, a client’s trust and full and frank disclosure is imperative. A solicitor needs to know a client’s full identity not only to establish whether he can act, but also to enable him to provide appropriate and tailor-made advice.
Cheung Kwok Kit is a partner at Deacons in Hong Kong. He can be contacted on +852 2825 9427 or by email at [email protected]