Why the Court may not lien your way
Why the long-established position that a lien on papers can be applied for unpaid fees may not be certain. We look at Ellis v John Hodge Solicitors (a firm) [2022] EWHC 2284 (Comm)
Background
This was a claim of professional negligence brought by the Claimant who had previously been represent by the Defendant in a personal injury claim, valued at circa £500,000.00. In those proceedings the Claimant had received a Part 36 Offer of £200,000.00 but proceeded to trial where he was awarded a little under £12,000.00. A disastrous result for the Claimant in terms of his damages and costs.
The Claimant sought advice from other Solicitors and brought a claim for professional negligence based on a failure to inform of risk. A position disputed by the Defendant Solicitors.
Summary
There is a long-established right that a Solicitor can apply a lien to their papers in the event a client fails to pay their legal costs. Faced with a professional negligence claim and having made a counterclaim for unpaid legal costs, the Defendant sought to rely on that right. The Claimant had issued proceedings without needing sight of those papers.
The issue of disclosure of the full file of papers was dealt with a the CCMC phase. The Defendant attempted to mitigate the position by offering disclosure of the files to the Claimant’s Solicitors on the basis none of the content was to be disclosed to the Claimant and the papers were to be returned at conclusion of the proceedings – in line with the case of Robins v Goldingham [1872] LR 13 Eq 440. The offer was declined by the Claimant as being unworkable if he was unable to see documents that would be relied on by the Defendant.
The claim was proceeding under the Disclosure Pilot, which provides an obligation on a Defendant to disclose documents central to the defence. If the Defendant was to argue that the Claimant was informed of the litigation risks in his PI claim, then the contents of the file would be central to that defence.
HH Judge Pearce, found that whilst the Defendant had a valid lien, the Court had the power to modify that position on disclosure in the Disclosure Pilot. With regard to all the circumstances, he found that it would be inappropriate to allow a lien to be applied to documents that would be properly disclosable in the claim.
The circumstances taken into account by HH Judge Pearce were.
- When and why the Solicitor / client relationship ended
- Who ended that relationship
- The nature of the case
- Stage of the litigation
- Conduct of the parties
- Whether any order would cause undue hardship to either party
- The fact that any order would likely devalue any lien.
Having considered those principles HH Judge Pearce declined to modify the Disclosure Pilot regime and ordered that the Defendant’s files be disclosed to the Claimant.
Whilst the right to exercise a lien over your files for unpaid fees has not been removed. In exceptional circumstances, dependent upon the nature of the claim and the importance of the files to the claim, the outcome is perhaps not surprising that your files may have to be disclosed. Perhaps more surprising is the fact that there was no existing case law on the point.
How can PIC help?
As the number of claims by former Clients against there Solicitors increases. The issues of when and what should be disclosed, and the costs implications are becoming ever more relevant. PIC’s experienced Costs lawyers and Costs Draftsman are able to advise on the pitfalls of Solicitor own client costs disputes.
James Peters, Costs Lawyer
10.11.2022