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Firm not entitled to fees after 'sacking' client

21 February 2011

A firm which refused to continue acting for a client in a row over fees must repay the entire amount plus VAT, the High Court has ruled.

The court heard that the firm, in Hampstead, London, told a client that its estimated fee for a matrimonial hearing would be £3,500 plus VAT.

Delivering judgment in Minkin v Cawdery Kaye Fireman & Taylor [2011] EWHC 177 (QB), Mr Justice Cranston said the firm sent Gary Minkin an interim bill for almost £5,500 plus VAT. Minkin paid the firm £3,000, but the firm replied that it could not continue to act unless it received the rest.

In September last year, Master O’Hare held that Minkin had reasonable justification to delay payment because the invoice exceeded the estimate, but the firm had no right to suspend work.

Cranston J said the master concluded the firm terminated its retainer by refusing to do further work without payment, amounting to a repudiatory breach of contract.

“The breach was a serious breach,” Cranston J said. “The firm ‘downed tools’, in particular in refusing to contact the court, thereby destroying the prospects of a continuing relationship with Mr Minkin.”

The firm was ordered to refund all the amounts paid, less counsel’s fees. Upholding Master O’Hare’s ruling, Cranston J said termination of retainers had to be on “reasonable notice”, under section 65(2) of the Solicitors Act 1974. He said that the firm’s interim bill of £5,472.50 exceeded the estimate of £3,500 plus VAT by a “considerable margin”.

The firm knew that Minkin had “limited funds” and yet gave him no advanced warning that the estimate was being exceeded, Cranston J said.

“The first time he knew that this had occurred was when he received the invoice.”

He went on: “The outcome may seem harsh on the firm. But the fact is that it should have been clearer in its retainer letter as to the nature of the engagement.”

Cranston J said the firm “must then consider whether, in the circumstances, the client has reasonable justification for not paying and whether it would be reasonable to terminate the contract for non-payment. And it can only do that with reasonable notification.”

Cranston J dismissed the firm’s appeal.

Richard Clarke, joint senior partner of Routh Clarke in Leighton Buzzard, Bedfordshire, acted for Minkin.

“My experience is that solicitors seeking to terminate their representation do not generally appreciate what is involved,” Clarke said.

“Often the client care letter fails to set out what the circumstances are entitling them to come off the record.

“One letter I have come across said only: ‘If we decide not to represent you any further, we will inform you of that’.”

Clarke said the law firm should have written to the client and explained clearly what needed to be done and what the consequences were of not doing it.

“If a client says he wants to challenge a bill, you cannot turn round and say ‘you’re sacked’.

Clarke added that the costs incurred by both sides in the litigation over Minchin’s bill had already reached a sum that was ten times more than the bill.

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Risk & Compliance Legal Aid Conveyancing