Independent legal advice (ILA) is when a person consults a lawyer who is not connected to the other parties in a legal agreement. The lawyer’s role is to offer impartial advice, ensuring the person understands the legal document they are signing and any risks they are taking on.
Why is independent legal advice important?
ILA is important so that the person receiving the advice knows exactly what they are agreeing to. It prevents misunderstandings and makes sure they are not being pressured into signing something they don’t fully understand. The lawyer providing the advice is independent and focused on the best interests of the client so that they are protected legally.
When is independent legal advice required?
Let’s look at three examples:
A director guarantee
A director guarantee is a legal commitment made by a company director to personally repay a loan or debt if their company cannot. ILA from a company such as Parachute Law ensures the guarantor understands the risks involved.
Mortgage agreement
When someone is offering their property as security for a loan, or when an occupier (such as a partner) is giving consent to a mortgage, ILA helps ensure all parties know what they are committing to.
Transfers of equity
How is independent legal advice given?
The process usually involves a meeting between the individual and the independent lawyer. The lawyer will go over the legal documents, explain the potential risks, and ensure the individual understands their options. The lawyer may also provide a written confirmation that they have given independent advice, which can be used as proof that the person was fully informed.
Can you ignore independent legal advice?
While it might seem like an extra step, independent legal advice is sometimes a legal requirement. In certain cases, agreements might not be legally valid unless the person involved has received ILA. Ignoring this step could result in serious consequences, such as financial losses or future legal disputes.
