Limited Retainers & Unbundling Solicitors Duties Clarified

These arrangements are becoming increasingly common, with the rise of litigants in person, and “un-bundling” of legal services, including litigation generally and family proceedings. In this case, the defendant solicitors were asked to tidy up a consent order for settlement of a matrimonial dispute.

The claimant sued her solicitors, alleging negligence and breach of contract, because she claimed that they had failed to advise her fully about the terms of the order. The claimant was an experienced accountant, and although a previous firm of solicitors had been advising her, the divorcing couple were acting without solicitors in putting together a consent order themselves. They lodged this for approval by the County Court.

However, the District Judge refused to approve this order, due to lack of precision in the wording. The claimant then instructed the defendant solicitor to amend the draft consent order, to put it in to a form likely to be approved by the County Court. The defendant solicitor duly amended the draft consent order, which the Court approved.

The claimant subsequently regretted the consent order. She made a claim for professional negligence on the basis that the solicitors had failed to advise or warn her against entering into the order.

A District Judge heard four days’ evidence. The claim was dismissed on the basis that the “retainer” or terms of engagement was limited – the defendant solicitor was under no duty to give such advice or warnings.

Reasons

The solicitors were held to have been working within the limits of a restricted engagement and not to have broader duties to advise on the merits of the claimant’s case, the agreement, or her opportunities for a better outcome. Because of the limited retainer, the solicitors owed no duty to enquire further or to advise that the agreement may be unfair or that there had been no investigation of the husband’s finances.

That sort of advice was not reasonably incidental to the retainer because the claimant:

• Was an intelligent woman. She was experienced in litigation. Her correspondence showed her competence and grasp of the issues.
• Had already taken legal advice about the proposed order which she had ignored. There was no reason to suppose that she would have acted differently if the defendant had given the same warnings.
• Had written to the defendant saying that despite the risks, she wished to conclude the order promptly.

Key Principles

The claimant appealed to the Court of Appeal. Jackson LJ gave the lead judgment. He reviewed the authorities relevant to limitation of retainer and summarised the key principles:

1. A solicitor’s contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake.
2. It is implicit in the solicitor’s retainer that he/she will give advice which is reasonably incidental to the work that he/she is carrying out.
3. In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client.
4. In relation to (3), it is not possible to give definitive guidance, but e.g.

• An experienced businessman will not wish to pay for being told that which he/she already knows.
• An impoverished client will not wish to pay for advice which he/she cannot afford.
• An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client.

5. The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor’s retainer.

6. It is good practice for the solicitor to confirm such agreement in writing.

Summary

The judgment includes a timely summary of the extent of a solicitor’s duty to advise. It highlights the importance of recording the limits of a retainer in a client care letter when providing unbundled legal service, which are becoming increasingly popular.

Paul Sykes is a Director in our Disputes Management department. For further information regarding professional negligence contact Paul.Sykes@lf-dt.com