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Solicitors can terminate retainers for good reason and get costs

2 March 2010

Solicitors are entitled to terminate retainers for good reason and claim costs from their clients, the Court of Appeal has unanimously ruled.

Environmental lawyer Richard Buxton, who runs his own practice in Cambridge, said the ruling overturned a “very worrying” High Court judgment.

Mr Justice Mackay said a solicitor could not terminate a retainer merely because his client’s arguments were “bound to fail” (see solicitorsjournal.com 12 August 2008).

Delivering the leading judgment at the Court of Appeal in Richard Buxton (Solicitors) v Mills-Owens [2010] EWCA Civ 122, Lord Justice Dyson said whether a solicitor had good reason to terminate was a “fact-sensitive question”.

There was no comprehensive definition in the solicitors’ practice rules or code of conduct, or in any of the authorities cited in the case, he said. Dyson LJ accepted the arguments of the Law Society, which intervened in the case, that it was “wrong to restrict the circumstances in which a solicitor can lawfully terminate his retainer to those in which he is instructed to do something improper.

“I accept that solicitors should not lightly be able lawfully to terminate their retainers, leaving their clients with the task of finding fresh solicitors to complete the job.

“But the desirability of protecting a client from an arbitrary and unreasonable termination is not a sufficient justification for giving such a narrow interpretation of the phrase ‘good reason’ as the judge has given in this case.”

Dyson LJ said the particular question which arose in the appeal was where a client insisted on putting forward a case and instructing counsel to argue it, even though it was “doomed to disaster” or “bound to fail”.

He disagreed with the advice given in the latest edition of Cook on Costs, following the High Court judgment in the Buxton case.

Dyson LJ said that if an advocate did not consider a point was properly arguable, he should refuse to argue it.

“He should not advance a submission but signal to the judge that he thinks that it is weak or hopeless by using the coded language ‘I am instructed that’. Such coded language is well understood as conveying that the advocate expects it to be rejected. In my judgment, such language should be avoided.”

Lord Justice Dyson concluded that both Buxton and his counsel were right not to put forward arguments they considered to be “hopeless and were not properly arguable” and that Buxton had good reason to terminate the retainer.

He said the common law rule that a solicitor is entitled to be paid for work done prior to termination, if he terminates for good reason, had been part of our law for almost 200 years.

“It follows that the appellants are entitled to be paid their profit costs and disbursements for the work done prior to the termination.”

Dyson LJ added that Buxton had shown “conspicuous patience”.

Lord Justice Maurice Kay and Sir Mark Potter, president of the Family Division, agreed.

Buxton said he had “every sympathy” for the client, who was objecting to a neighbour’s plans to build a series of extensions to a house in the New Forest.

However, he said the case “establishes beyond doubt that we were right to terminate the retainer and we have the right to be paid”.

Buxton said that in some ways he would have liked the Court of Appeal to have gone further, as he felt that solicitors still had a “sword of Damocles” hanging over them if they terminated a retainer for a reason which was later considered not to be good.

He added that although, following payments on account, the sum at stake was less than £7,000, he had spent a lot of time on the costs litigation since it began in 2007.

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