Focus on LPAs

Private client practitioners will have noted the recent broadcast on BBC Radio 4 about acting as a professional attorney by partners in solicitors' firms. It is a good time to remind us all of the duties and responsibilities of acting as a professional attorney. The key concept to bear in mind is that there are higher standards required by the OPG from professional attorneys than for lay attorneys. In addition the SRA imposes additional regulatory requirements on such attorneys. Beyond that there are the practical points that will help you ensure that your work as the client's attorney is managed well and in the best interests of that client.

There is a helpful guidance note PNI 'Agreeing to act as a professional attorney' on the OPG's website and all professional attorneys should abide by the provisions set out in that guidance. First and foremost you need to know whether you are acting as a professional attorney or not. The guidance states that anyone receiving a fee for acting as an attorney has to abide by the professional attorney rules. The guidance applies (but not exclusively) to people who work as solicitors, accountants, will-writers, financial advisers and those working for charities.

You should be aware that the Mental Capacity Act Code of Practice provides that attorneys who are being paid for their services, or hold relevant professional qualifications, must demonstrate a higher degree of care or skill than those acting in an unpaid or informal capacity. Attorneys who undertake their duties in the course of their professional work must display professional competence and must also follow their profession’s rules and standards.

Such standards include ensuring that there is no conflict of interest between your role as an attorney and that of the donor or their best interests. You should explain to the client what your skills and experience is and that you understand the rules and regulations about mental capacity law.

One of the aspects that concerns the SRA and the OPG is where a professional attorney is acting for a great number of clients as their attorney. Quite rightly the OPG asks you to consider whether you would manage if all of those donors needed help on the same day. Would you be able to cope and would your client's best interests be served by this?

Some practical steps should be taken now by the professional attorney and should include the following:

• Make sure that the professional taking over management of the client's affairs has the skills and experience to embark on this role. It is not good enough to take up this role if you do not the time, skills and understanding of what is involved in managing the client's affairs but also an understanding of what is involved in that particular client's estate.
• Very often private client practitioners will be acting for a client over many years if not for a family for generations. It is incumbent on each of us to keep powers of attorney under review not only as to the specific additional provisions needed for safeguarding but also as to the appointment of the professional themselves.
• Appointing more than one professional is a safeguard for the client but also for the firm. If you have a trust corporation then this is a helpful tool to manage the client's affairs. It provides continuity for the client thus avoiding problems when the particular professional attorney wants to retire. There is nothing more irritating if the lawyer themselves have not anticipate this well in advance and arranged for the client to consider the appointment of either the firm's trust corporation or a joint and several appointment of 2 or 3 of the private client partners. Note the SRA's thematic review into power of attorney and deputyship work suggests that using a trust corporation can demonstrate that we are able to safeguard our clients' interests and also protect them when an attorney wants to retire or can no longer act.
• Consider also whether it should be just the private client partners who are appointed as the professional attorney and not partners of other teams in the firm. Private client practitioners have the knowledge and skills to understand the mental capacity legislation, acting for vulnerable clients and having the experience to know when to step in to protect the client's personal affairs.

Attorney’s duties start immediately on registration of the LPA unless postponed to a time when capacity has been lost. Note for an EPA registration only takes place on the onset of mental incapacity. You need to be alert to your client's circumstances by keeping in regular touch with them. Otherwise how will you know when the client's capacity has been lost and you then have sole control over their financial affairs. You will need to act immediately to ensure that all third parties are aware of your appointment and register the LPA with the banks, investment managers, pension providers etc. you are now responsible for managing those finances and ensuring the donor's property interests are protected.

The penalties for not abiding by these rules can be severe and can lead to a claim for negligence, regulatory investigation, financial loss and criminal liability. This can apply to both to the individual appointed and their firm. Partners and members of LLPs will have to show utmost good faith to the partnership or LLP and to the other partners or members. It is important for this reason for each partner or member to ensure that they all abiding by the these duties.

It is important to remember that as a professional attorney you will have no power to charge for your services if the LPA does not contain a charging clause. You will need to detail any retainer fees, clearly tell the donor about your fees for acting under the LPA, and tell the donor that your fee rates are likely to increase over time. You should also identify for the donor situations where your fees are likely to build up for example, if you have to challenge care-funding decisions or if the client's property takes some time to sell. Similarly the OPG expects you to involve administrative staff to keep the costs to the donor down.

The SRA says solicitors should take on only as much work as they can handle. Firms need to consider their resources before agreeing to an appointment under an LPA. If you are appointed as attorney in many LPAs, consider how you (and your organisation) would cope if every donor needed your help at the same time. You should keep records of the number of LPAs you are appointed in and, before you agree to multiple appointments, have plans in place to allow you to carry out your duties appropriately if you have to act simultaneously under several LPAs.

The SRA also imposes on professional attorneys in law firms specific accounting rules in Rules 8.2, 8.3 & 8.4 of the SRA code as regards operation of a client's own account. As a professional attorney these rules provide that you must

1. Keep and maintain accurate, contemporaneous, and chronological records to:

• record in client ledgers identified by the client's name and an appropriate description of the matter to which they relate:
• all receipts and payments which are client money on the client side of the client ledger account;
• all receipts and payments which are not client money and bills of costs including transactions through the authorised body's accounts on the business side of the client ledger account;
• maintain a list of all the balances shown by the client ledger accounts of the liabilities to clients (and third parties), with a running total of the balances; and
• provide a cash book showing a running total of all transactions through client accounts held or operated by you.

2. At least every five weeks you must also obtain statements from banks, building societies and other financial institutions for all client accounts and business accounts held or operated by you.

3. You must complete at least every five weeks, for all client accounts held or operated by you, a reconciliation of the bank or building society statement balance with the cash book balance and the client ledger total, a record of which must be signed off by the COFA or a manager of the firm. You should promptly investigate and resolve any differences shown by the reconciliation.

4. You keep readily accessible a central record of all bills or other written notifications of costs given by you.

Consider the practical aspects of your appointment. In the context of communications about the donor's affairs make sure that you are receiving all correspondence about their finances and property. For example, bank statements and bank correspondence should be addressed to your firm's address not your home address. In order to comply with the accounts rules and in particular if you are away from the office consider how can your office can continue to manage the firm's accounting responsibilities.

Responsibilities start when you become appointed. The donor may want you to act straightaway or simply when he or she has lost their mental capacity. Whenever the LPA is activated your responsibility extends to checking what is going on with the bank accounts, investment accounts, utilities and other outgoings. You need to make sure that any regular debits and credits to these accounts can be explained. Don't assume, for example, that because the DWP is paying a particular benefit to the donor's bank account that the donor is entitled to that benefit. You need to check that entitlement and if need repay any overpayments.

Similarly care home contracts need to be considered carefully. Does the donor have sufficient funds as a self-funder to pay the care home for at least a year? What plans can you put in place should fund begin to diminish? Remember by signing the care contract you could be regarded as the donor's agent and become personally responsible for the fees. Make sure you read the contract carefully and plan ahead. If funds begin to run out you need to consider what that means for your appointment. You cannot simply abandon the donor but you need to consider how to manage their affairs at that point.

Consider whether your firm should simply adopt the procedures which bind Court of Protection deputies? Their rules for accounts, what a Court visitor would expect you to know and that you are able to answer queries on your costs, debits and credits and evidence of best interests decisions.

Most importantly make sure you visit the donor either at least once a year or even better every 6 months. Without such visits how can you know whether the donor's needs have changed? Ensure that the care standards at the home are being maintained – remember the Care Quality Commission only inspects a care home every 2 to 3 years. You have to satisfy yourself that the levels of staffing are still good – that it does not tail off at the weekends or holiday seasons, that the food is of a good quality and that the donor is regularly having visits from the GP assigned to the home. Only by keeping in close touch with the donor can you find out whether there are any unwanted friendships or relationships with the donor and if so what does the care home say about this? That the donor is participating in care home activities. Use a checklist on such visits and keep these as a record as to how things may have changed since your last visit either in the care home management or in the condition of the donor.

Make sure that your staff are keeping in touch with the donor in between your visits and keeping their paperwork and records up to date. Ensure that they are well trained, kept up to date with current practice, and above all that you are having regular supervision meetings.

Acting as a professional attorney requires time and dedication. If you have multiple appointments you need to think whether this is manageable and whether you are available sufficiently to attend to the donor's needs. It is worth considering the SRA's helpful thematic review on powers of attorney and how your firm's practices could be improved and sustained. Solicitors should be able to manage this work but it does need your team to be well trained, supervised and dedicated.

Ann Stanyer, Wedlake Bell LLP