Should lawyers, financial planners and accountants simply do what clients say? In a recent Capacity & Capability Awareness Workshop delivered to a group of CPAs, Michael Perkins was asked, “Is it not our job to do what our client tells us?”.
Michael’s answer was: “As a lawyer, my professional conduct rules require that I only act in accordance with the lawful and competent instructions of my client. So my answer to this question must be NO. Lawyers have to be satisfied about the competence of their clients, not just themselves, at the start of any engagement. What do your professional conduct rules say about the issue of client competence?”.
The answer was “Nothing”.
“Does this mean that you are expected to act for an incompetent client?” asked Michael.
The answer was “Absolutely not!”.
Michael’s final question was: “What criteria do you use to make sure your client has sufficient decision making ability to work with you, give you appropriate instructions and take responsibility for their decisions made on the basis of your advice?”
Silence was the reply.
Financial Planners are required by the Financial Planners and Advisers Code of Ethics 2019 to act in accordance with the following values:
(a) trustworthiness;
(b) competence;
(c) honesty;
(d) fairness;
(e) diligence.
These are the required attributes of the professional, NOT the client. So, in comparison with the lawyer, the answer to the initial question may be “Yes, as long as all other elements of the code are not infringed”.
For professional accountants in public practice, the APES 110 Code of Ethics for Professional Accountants applies and, like the Financial Planners regime, is focused on the target attributes of the professional with no regard to the target attributes of their client.
“The ethical precepts of professionals commonly and concurrently engaged in dealing with the Private Client Services fields of wealth conservation, estate administration and succession have no apparent common process to qualify the competence of their client when they start working with them.” – Michael Perkins
The ethical precepts of professionals commonly and concurrently engaged in dealing with the Private Client Services fields of wealth conservation, estate administration and succession have no apparent common process to qualify the competence of their client when they start working with them. Only the lawyers are so bound. Non-legal professionals often see clients more frequently than lawyers and are best placed to take notice of changes in circumstances that could place the client at a special disadvantage. This means professional focus on disadvantage is about addressing damage as it occurs rather than mitigating the risk of damage in the first place.
When we first ask a client “What can I do to help you?”, this starts by adding a second question: “Why?”.
Neuropsychology tells us an early sign of a decline in cognition is a lack of insight. Language and sociability are often the last abilities to deteriorate as major cognitive decline such as dementia progresses.
So, the client who says “I feel overwhelmed”, or “Let me think about this”, may well be disguising an inability to process the information you are giving them.
It is the lack of ability of a client to advocate their own best interest that lies at the heart of professional responsibility to take more care with vulnerable clients. Australian Consumer law enshrines this responsibility for providers of goods and services in the economy when dealing with clients who have special disadvantage.
Why should we be concerned with this?
Firstly, because it is fundamental to a professional engagement that the client remains responsible for the decisions they take on the basis of the advice given. If the client is not an active decision maker, then it is the professional who becomes the defacto decision maker; a role they normally would not be contracted to perform.
Secondly, as a society we need to be concerned about the emergence of abusive behaviour and look to mitigate the impact of that on any person. As professionals, I believe we have a duty under consumer law and our normal fiduciary responsibility as professionals to respond to evidence of circumstances that can create special disadvantage for a client.
A call to action
“Assuming decision making capacity when it is unwarranted exposes professionals and goods and service providers to the risk of complicity in the disadvantage suffered by the client and possibly others.” – Michael Perkins
Assuming decision making capacity when it is unwarranted exposes professionals and goods and service providers to the risk of complicity in the disadvantage suffered by the client and possibly others.
To respond to this, in our view, all commercial and professional businesses and their workforces (providers) need to:
1. Be able to recognise the behaviour that is consistent with the assumption of decision making ability
2. Where a decision making capacity assessment trigger is present, to be able to recognise and respond to that trigger responsibly, so the client’s ability to proceed with the proposed transaction can be qualified.
Recognising when this trigger is present is a first step in protecting both client and provider from becoming embroiled in a decision for which the client is not able to take responsibility. This means employers have to decide to become a cognitive responsive workplace employing cognitive workers.
Autonomy First is providing training and tools to employers who want to deal with these risks in their operations.
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