Feedback on consultation exercise 1
Generally well done.
Consultation forms adequately completed, with little information other than client’s details
required.
Statements mostly done well, sometimes lacking in detail, some lacked structure and
required approach.
What client wants: a car to get kids to school safely.
Advice varied enormously. This is how one could advise such a client:
Legal issues that could have been traversed:
• This is a credit agreement;
• The National Credit Act regulates the industry;
• The right to pre-agreement disclosure (quotation);
• The cost of credit (interest and fees, most importantly initiation and service fees), and
the need to check that these are within the law (quote or credit agreement can be
checked);
• The requirement that the credit provider does an affordability assessment (required
by NCA) – may not have happened here (which is unlawful), because it appears that
client is over-indebted, and Wheels Bank are apparently willing to contract with client
despite this;
• Over-indebtedness and its implications;
• The advancing of reckless credit and its implications (credit agreement concluded
when consumer is already over-indebted).
Factual analysis:
• Most NB: client’s monthly expenses exceed her income by R550 (or R1550 if you
exclude the income from maintenance), therefore she is already over-indebted (law
relating to over-indebtedness and reckless credit therefore becomes relevant).
Income (R16000), less direct deductions (R7000), less debt repayments (R2050),
less monthly expenses (R7500) = balance of – R550.
• Client clearly cannot afford to buy this car.
• But this is financial advice, not legal advice? You are equipped to give basic financial
advice, so give it – there is no need to refer the client to a financial adviser when the
sums are so simple.
How to advise this client?
• Client should therefore be advised unequivocally not to conclude this credit
agreement – not always easy to give bad news, but we must when necessary. Also,
we are not always able to give client what they want.
• Why this advice? Legal and related non-legal issues (difficult to separate):
- She cannot afford it.
- She will get herself deeper into a debt trap from which she might never escape.
- Besides purchase price, there are many other attendant costs of owning a
vehicle: fuel, licensing, maintenance, insurance, which she can ill afford.
- This is an instalment agreement in terms of the NCA, and as such client will
become owner of the vehicle only once the full purchase price is paid.
- Until then the bank has the right to re-possess the vehicle if she defaults on
payment.
- She could end up with a judgment against her name.
- She could end up being blacklisted by credit bureaux and unable to secure debt
in future, at least until her other debts are cleared.
• So, she must weigh up carefully the challenges of living without a car (and her
children’s safety) against all these negative financial consequences.
Yet surely we should do more than just bluntly tell her that she can’t afford this car, leaving
her with nowhere to turn to get her children to school safely?
Some students came up with other creative ideas:
• Claiming an increase in maintenance from her husband, given this additional
financial need.
• Client advised to pay off enough of her other debt first to make it possible for her to
afford an additional debt.
• Debt-restructuring: reaching agreement with other creditors to pay back to them a
lesser amount per month to make it possible for her to be able to afford the additional
R1500 per month.
• Working on reducing her expenses on other items like groceries.
• Developing a budget to control her expenses.
• Selling unwanted possessions to help pay off her debts.
• Try to find additional, after-hours work (eg online work in her field of expertise).
• Try to find a cheaper car, with lower monthly instalments.
These were mostly good attempts, but a long shot given the daunting financial challenges.
All the focus was on how to buy a car, but few on other ways to address client’s concern: to
get her children to school safely.
What she wants: I want a car. Her underlying interest in getting a car is to get her children to
school and to keep them safe. Are there not other ways to get them safely to and from
school at no / much lower expense?
• An adult to walk with them.
• A lift with another parent / teacher in the neighbourhood going to the same school (at
no charge, or a less expensive option) – client could enquire at school, principal
might be able to identify someone.
• Taxi.
• Moving closer to the school.
These should at least be canvassed with client in case they bear some fruit, we cannot
ignore them. Our job is to do more than just provide legal advice, but sometimes to address
ourselves to problems in a more holistic way when the situation demands it.
These are examples of preventative lawyering… See Slide 2.
Besides this it is important to be attentive to psychological and emotional needs as well (this
came through in a few student responses). A few students paid specific attention to client’s
primary concern, which is for her children and their safety. She will do whatever it takes to
achieve that. This must be heard, understood and acknowledged, so that client can have
trust in your judgment when it comes to giving advice. You can also show signs of care and
concern for client’s needs in small ways , such as asking the names of the children, their
ages, and what school the older one goes to. This can help to build rapport and trust
between lawyer and client.
These are examples of therapeutic jurisprudence… See Slides 3 and 4.
