What is Legal Advice and Why is it Different than Other Advice?
Bob and Mary are running short on cash to live their life and pay their mortgage. They are introduced to a private lender who offers to lend $100,000 against their house as a second mortgage at a high interest rate, but he wants the money back in two years. He offers to take care of all the documents fort hem; they just need to get a lawyer to sign off on a certificate of independent legal advice and the lender will take care of the rest. Bob andMary find Corey, a lawyer, who explains what the documents say, signs off on the certificate and charges $400 for the quick work.Joan is an elderly part-time employee looking to retire. Right before she sends in her resignation, she is terminated from her position and offered al engthy severance package. Joan shows the paperwork to Sara, an employment lawyer, to make sure it’s OK. Sara tells Joan that based on case law in Ontario, the package is too low, and that Joan can get way more money if she sues the company. Joan declines the employer’s offer and pays $5,000 in retainer to Sara who moves forward with a lawsuit.
Joan is an elderly part-time employee looking to retire. Right before she sends in her resignation, she is terminated from her position and offered a lengthy severance package. Joan shows the paperwork to Sara, an employment lawyer, to make sure it’s OK. Sara tells Joan that based on case law in Ontario, the package is too low, and that Joan can get way more money if she sues the company. Joan declines the employer’s offer and pays $5,000 in retainer to Sara who moves forward with a lawsuit.
How do we determine whether legal advice is good or bad? Outside of basic competence issues (missing statutory deadlines, for example), is there a difference between good advice, good legal advice, bad advice or bad legal advice?
Sometimes, lawyers will give advice and say it was good “legal advice” — they studied the merits and case law and gave an opinion on how to proceed legally even if it is bad practical advice. With the rise of artificial intelligence, which can answer legal questions and provide “good legal advice,” lawyers should now start to think critically about what it means to provide good legal advice and practical advice. I would argue there is really no difference between the two: lawyers have to provide good advice.
The two case studies at the start of this article are typical examples of the kind of bad advice often disguised as “good legal advice.” Corey might be giving good legal advice to Bob and Mary — explaining the lending documents, what they say and the consequences of the loan. But if Bob and Mary have no plan on how to pay back the loan in two years, Corey is not really helping this couple — he is simply going through the motions under the guise of providing good legal advice. Worse, he is facilitating a situation where Bob and Mary end up losing further equity value in their house and charging $400 for the privilege. A better course of action would be to ask the couple why they are taking this mortgage in the first place and how they plan on paying it back, or to offer alternative solutions such as downsizing to maximize their cash value or speaking with a financial adviser to help with their expenses as opposed to taking on this loan as a band-aid solution to the problem.
Similarly, Sara would say she gave Joan great legal advice. However, Joan was about to retire. Now, instead of retiring and taking the package, which was her original plan, Joan is now paying $5,000 in legal fees and dealing with the stress of a lawsuit with the hopes that one day she may or may not achieve more proceeds (net of further legal fees) several years from her retirement. There is an ultimate conflict between a lawyer trying to bill a client and providing what is best for the client when they are seeking advice. In the case of Joan, perhaps at her age she doesn’t have the personality, mental or physical health, or excess funds to invest in a lawsuit and collect the award even in the event she wins. Lawyers may get too emotionally tied into what the client’s case is on the merits but not what the best advice and path forward is.
Many would argue that lawyers are hired to give legal advice pursuant to their professional rules, not life or practical advice. But this argument is a cop-out. Lawyers are service providers — they are being asked for advice in legal situations, but it is still advice, nonetheless. What should they do? And the answer is not an answer that artificial intelligence can provide. After all, Joan could simply ask ChatGPT what the common law termination entitlements she could obtain are and get the same advice. What clients truly need from lawyers is guidance based on discussion and scrutiny of the holistic circumstances.
Another counterargument is that if a lawyer is being paid for the service, and there is a reasonable basis for a claim, they should take it on. After all, it’s the client’s decision. But that discounts the idea that most unsophisticated clients are deferring to the lawyer for their counsel. Joan, Bob and Mary don’t know what to do — that is why they are asking a lawyer. When they are being presented with options, they want a real assessment beyond “experience and the law says you can get more” or “this is what this document means.”
Much like when a client goes to a doctor and asks for treatment, a good doctor doesn’t just provide medicine and see you out; they explain the potential risks and then give their recommendation, which might require lifestyle changes instead of medicine. A lawyer is the same — they shouldn’t outline several options and say, “It depends. It’s up to you.” They need to assess the person and explain the risks. Not case law or legal risks but real practical risks — side effects. “You may have sleepless nights going this route,” “This will cost more,” “This will take more time,” etc.
So, what is good advice? It’s taking all circumstances, both legal and non-legal, being candid not just in the merits of a case or what transactional documents say or mean but with everything that comes with it — costs, time and stress. Lawyers during consultations should assess not just the merits of a claim but mannerisms, health, support, trends in the law, etc., and this may involve pushing the client away from a high billing course of action, turning them to a different adviser with more experience, or not taking a client file at all.
While the choice is up to the client, the choice on recommending them is the lawyer’s ultimate responsibility. Presenting good advice, even pro bono, is more valuable than any form of “legal advice.”
This article was originally published by Law360 Canada, part of LexisNexis Canada Inc.: https://www.law360.ca/ca/pulse/articles/2403930/what-is-legal-advice-and-why-is-it-different-than-other-advice-