Terminating a retainer with your client, some of the pitfalls revisited
If you are a Solicitor considering terminating a client’s retainer for want of instructions, you should read this article as things may not be as simple as they first appear…
In Toms (t/a Goldbergs Solicitors) -v- Brannan, the solicitor had entered into a Conditional Fee Agreement with his client to bring a claim against the client’s broker. It appears that the Claimant was initially positive about the merits of the claim and the Defendant seems to have provided funds to obtain an expert report. Liability was denied and a barrister’s opinion was to be obtained, but was never provided to the client. Limitation expired without the Defendant having authorised the issuing of proceedings, bringing the claim to an end. Less than a week later, the Claimant terminated the CFA “for failing to give instructions to issue the claim”. The Claimant then delivered a bill to the Defendant, which was disputed, leading to the instigation of assessment proceedings. The claim for fees was dismissed, with the Claimant ordered to pay more than £6,000 in costs to the Defendant. The Claimant appealed.
The Claimant took the view that the Defendant had been aware of the impending expiry of the limitation period and that instructions to issue proceedings had been sought, together with a request that the Claimant be placed in funds for the Court issue fee and therefore the Defendant had not kept to his responsibilities under the CFA.
The Court disagreed, making findings to the effect that the Claimant had not provided the Defendant with a proper analysis of the claim so as to put the Defendant in a position to make an informed decision as to whether or not to issue proceedings. The Claimant was said to have failed to act in the Defendant’s best interests, or to explain properly and in a timely fashion and that, in the Court’s view, was why matters got to that stage at limitation, rather than any failing of the Defendant’s.
With the limitation period having expired, absent instructions to issue the claim, the Court found that the Claimant had been entitled to terminate the CFA, which provided that “We may end this agreement before you win or lose.”
As the Court noted, the CFA contained two clauses which governed what was to happen if the solicitors terminated the CFA:
“(i) We can end this agreement if you do not keep to your responsibilities. We then have the right to decide whether you must:
- Pay our basic charges and our expenses and disbursements including barrister’s fees….
(ii) We can end this agreement if we believe you are unlikely to win. If this happens, you will only have to pay our expenses and disbursements. These will include barristers’ fees if the barrister does not have a conditional fee agreement with us.”
Essentially, under the terms of the retainer, if the Defendant had not kept to his responsibilities, the Claimant would be entitled to be paid, if he had, the Defendant’s liability would be limited to disbursements.
The Court found that the Defendant had kept to his responsibilities, there having been an apparent failure to properly advise, rather than a failure to provide instructions. The Claimant’s appeal was therefore dismissed with costs of a further £5,000.00.
The solicitor’s claim for costs from his client was dismissed as a result of a failure to put the client in a position where he could provide informed instructions, a position not a million miles away from the failures found in Belsner to obtain informed consent from a client in respect of a funding arrangement (it is important to note that Belsner is presently the subject of an appeal).
It seems that the Courts are sending a consistent message that solicitors must ensure their clients have all the necessary information to make informed decisions if the solicitor is to obtain payment from that client. That might appear a fairly basic principle, but it seems to be one that occasionally gets lost in translation, especially where this relates to payment terms between solicitor and client.
How can PIC help?
If you are considering terminating a CFA with a client, PIC would be happy to agree terms for one of our advocates to review your file and advise on the likely implications of your proposed course of action vis-à-vis the retainer between solicitor and client. Please note that our fees are unlikely to prove recoverable from either the client or their opponent in this instance, and the advice provided will not always be what you want to hear but are likely to be far cheaper than the outcome of an assessment with as catastrophic a result as was obtained in the above case.
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