On 19 April 2023, the Law Society issued guidance on the Impact of Climate Change on Solicitors – the first of its kind by a professional legal organisation to its membership (over 160,000 solicitors).

The guidance follows on from The Law Society’s 2021 resolution to provide guidance to solicitors on how to consider the likely impact of the ‘climate crisis’ when dealing with a legal practice matter; including how to advise clients on climate-related risks, particularly those purchasing real estate, and the associated risks to solicitors who do not do so. Further sector-specific guidance on particular areas of law has been promised by The Law Society, so there is more to come.

Why is the guidance necessary?

Solicitors owe a general duty to exercise reasonable care and skill in carrying out the work they have been instructed to do. As part of this general duty, solicitors owe a duty to clients to provide advice and/or warnings as to risks which they are, or should be, aware of and which may have an adverse effect on the matter in hand, for example the purchase of a property.

What the Law Society are saying is that this general duty should extend to climate-related risks.

What are climate-related risks?

The Law Society split climate change risks into three categories: physical risks, transition risks and liability risks.

Using the above example of the purchase of a property, some examples of these risk are as follows:

Physical risks – environmental impacts that could affect the value of the property being acquired such as flooding, subsidence, coastal erosion or other extreme weather events associated with climate change. A property affected by any one or more of these issues could become inaccessible, uninsurable or even worthless.

Transition risks – the impact of policy or legislation relating to the country’s Net Zero target. For example, upcoming changes to energy performance rating targets and the associated cost implications in carrying out works to bring properties within the required standards (and property valuation impacts if such works are not carried out).

Liability risks – a client seeking damages suffered as a result of the physical or transition risk related to climate change, which was not brought to their attention. This might include a loss of value of the property.

The guidance contains helpful checklists as to how climate-related risks relate to particular areas of practice. A full list of examples of risk types are set out in section 5 of Part C of the guidance which can be found here.

What should solicitors advise on?

Solicitors are not expected to advise on climate-related physical risks where it is outside their knowledge or qualification. However, what is expected is for solicitors to advise their clients on the availability of commercial search tools and/or other available professional advice or services, and make use of them where appropriate.

Similarly with contaminated land or tax issues, solicitors should know when to advise the client to seek further advice and clarity on certain matters.

What are solicitors’ legal duties when advising clients on the potential impact of climate change?

There are four main legal duties:-

1. Duty of care – a solicitor may have to look beyond the narrow scope of a client’s instructions to consider whether and to what extent climate legal risks are relevant
2. Duty to warn – a solicitor has a duty to warn a client about potential risks by pointing out hazards of a kind which should be obvious to the solicitor but which the client may not appreciate [1]. The extent of a solicitor’s duty to do so may vary between clients and matters, depending on the character and experience of the client and the work being carried out.
3. Duty to disclose – a solicitor has a duty to disclose to their client, when acting on a matter, all information material to that matter of which they have actual knowledge [2]
4. Duty to uphold service and competence levels – a solicitor must ensure that they provide a proper standard of service to their clients, including the level of competence and legal knowledge needed to practice effectively, considering developments in the law. They must also disclose when work is beyond their personal capacity and know when to seek expert or additional advice.

Climate change is happening and with the release of The Law Society’s guidance, solicitors would be well advised to consider professional training to develop their competence in this area, as part of their ongoing professional development, and with a view to the potential climate-related liability risk highlighted by The Law Society’s guidance.

The future of climate-related risks and real estate transactions

It will be interesting to see how this guidance feeds into solicitors’ practices and the searches which will likely be available.

Might a ‘climate-related risks search’ become standard practice?

What view will lenders take on climate-related risks – will they be risk adverse and what impact will this have on the availability of lending for properties in certain areas, such as flood risk areas?

This guidance is just the beginning…

[1] County Personnel (Employment Agency) v Alan R Pulver && Co [1987] 1 W.L.R 916

[2] Rule 6.4 of the SRA Code of Conduct for Solicitors