Ending a retainer: when is it ethical to do so?
Abusive behaviour and failure to respond to clear instructions are valid reasons to terminate a retainer, but firms must nevertheless tread carefully, warns Mena Ruparel
A couple of weeks ago, the COLP at a firm of solicitors contacted me to ask whether I could help with an urgent ethics query.
They had been experiencing. some difficulties with an erratic client. To the best of their knowledge the client did not have any vulnerabilities that they needed to take into account, other than the fact that he was involved in complex litigation.
He was not being forthcoming with documents or clear instructions, and he had recently started to bombard the solicitor with emails, none of which addressed any of the outstanding points.
His emails became increasingly abusive, and he subsequently complained about the increased costs, which arose as a direct result of the dozens of emails he sent in the middle of the night.
The solicitor suspected that he might suffer from mental health issues or that he was abusing drink or drugs; hence the midnight tirade.
The day after each one of these episodes, he would apologise to the solicitor and ask for them to understand the stress that he was under.
He was stalling the litigation, for unknown reasons, which would inevitably have adverse effects for him at the next hearing. The frequency of his midnight emailing was increasing, as were his costs.
The fee earner advised him that an adjournment of the next hearing was inevitable, due to his failure to comply with a court order. He wouldn’t remedy the breach or give instructions to seek an adjournment.
Their question for me was how to ethically end their retainer, if possible. On the face of things, the client was a successful businessman with a good income and a responsible job.
They felt that it was possible that he was creating difficulties to try to distract their attention from the missing documentation.
It was equally plausible, that he was in the midst of undisclosed personal difficulties, all of which they should take into account when considering whether or not to terminate his retainer.
It is clear from the Code of Conduct that solicitors must treat their clients fairly and comply with the principles and code when deciding whether to terminate instructions (O(1.4).
The retainer had been properly formed from the outset. The client had been given all the necessary costs information, he had signed their terms and conditions and had paid his bills.
There was even money on account of costs as per their terms of business. His erratic behaviour had manifested when the fee earner insisted that he produce the outstanding documentation, informing him that if he did not do so within a specified time that it would be sensible to seek an adjournment of the next hearing.
This advice seemed to trigger the flood of emails, he wanted an end to the litigation without participating in it.
Although this is not an uncommon desire, it is fairly uncommon for clients to unravel to the extent that this client had displayed.
Indicative behaviour (IB) (1.6) states that when we take instructions from clients, we need to have regard to their mental capacity or other vulnerability.
This was becoming increasingly difficult to assess for the solicitor who was not directly aware of any particular issues. The client’s sudden change in behaviour indicated that there was potentially an underlying issue. This was the first ethical issue to consider.
Secondly, the code indicates at IB (1.7) that you can decline to act if you cannot act in the client’s best interests. The client was putting obstacles in the way of the litigation process, which meant that it was highly likely a costs order would be made, for his failure to comply.
Given the client’s vocal objections to the level of his own solicitor’s costs, he would complain if a costs order was made; even though this would be a predicable result of his inaction.
His failure to give instructions to his solicitors to progress matters forward was counter-productive; would it be ethical for the solicitor to continue to act when no progress was likely to be made, and costs were spiralling to a disproportionate level?
Thirdly, it was important to recognise that the solicitor was concerned that the client would not readily pay his costs in the future due to his recent complaints.
The work in progress would likely wipe out the existing money on account, leaving the firm vulnerable in this respect. It was not reasonable to ignore that this issue was part of the solicitor’s desire to terminate the retainer.
Fourthly, the client needed sufficient time to find new solicitors in the event that the firm ceased to act, there were six weeks until the next hearing, (which was not a final hearing).
Would it be reasonable to give notice to the client now or had they left it too late to terminate the retainer?
Finally, was it adequate for them to tell the client that the relationship between the solicitor and the client had broken due to his abusive emails? Although he had repeatedly apologised for these incidents, he had not stopped sending aggressive emails.
Indication in practice
The current code gives some indication of those matters that solicitor should take into account, but in a busy office these indicative behaviours can be difficult to apply.
The multitude of factors that arise can be difficult to juggle, so it is important to remember that ethics guidance can be sought from the SRA online or by telephoning the contact centre.
In balancing the issues, it is central to the exercise to ensure that the firm is fair to the client. I would suggest that transparency goes hand in hand with fairness.
I discussed with the COLP whether there was the prospect that another fee earner could take over the file.
There was no other fee earner who was suitably senior to take on the complex litigation. In any event, the firm would still be left with the problem of the client’s failure to cooperate with the litigation, which was clearly not in his best interests.
We agreed that it seemed unavoidable that this client’s retainer would need to be terminated and that he should be given detailed reasons for the termination.
It was agreed that the firm could not continue to act, principally because it could not act in the client’s best interests.
The second reason they felt was reasonable to terminate the retainer was the abusive and aggressive emails, which had soured the solicitor/client relationship.
Without those emails, the firm may not have addressed the other issues but that wasn’t the main reason for them to end the retainer.
The firm obviously owed its employee a duty of care, not to have to deal with aggressive or abusive behaviour from clients, another issue for them to factor into the decision-making process.
The fact that a hearing was listed within a short period of time was significant, a new firm would need to be instructed, and the client had made it clear that he would not countenance a change of firm.
He would not be likely to instruct another firm quickly or at all. However, it would be possible for a firm to take over the files and apply for an adjournment before the next hearing, even if the client chose not to action a transfer.
Ultimately, although the solicitor was worried about fees being paid in the future, this could not form part of the decision to end the retainer. The firm had addressed the client’s complaints about fees separately.
The COLP formulated a letter to the client explaining the reasons that they were ending retainer.
They gave him details of the Law Society’s ‘find a solicitor’ tool, to help him to find a new firm.
Most importantly, our discussions were documented on the file, in the event that any complaints arose about their decision in the future.
Mena Ruparel is a solicitor and a member of the Chartered Institute of Arbitrators menaruparel.com