Limited appeal of limited retainers

Limited retainers are promoted as a tool for increasing diversity within the legal services market and widening access to justice. However, there are concerns about the practical difficulties and commercial risks inherent in such arrangements.

In September 2015, the LSB and the Legal Services Consumer Panel issued a joint report, acknowledging concerns surrounding the provision of unbundled services, primarily relating to: the assessment of client capability; offering advice on the basis of limited information; and difficulties in reaching clear agreements about the scope of work.

Practitioners share these concerns. They are also concerned about the commercial viability of limited retainers and the position of their professional indemnity insurers. Given these concerns, solicitors and other interested parties have sought guidance from the courts.

The courts have maintained that it is implicit in a retainer that the solicitor will provide advice which is reasonably incidental to the work being undertaken (Mansion Estates Ltd v Hayre & Co (A Firm) [2016] EWHC 96 (Ch)). However, in cases where the solicitor has attempted to expressly limit the extent of the retainer, the position is less clear.

Limited retainers

In Sequence Properties Limited v Patel [2016] EWHC 1434 (Ch), the appellant instructed solicitors on a limited basis to assist with the preparation of an appeal bundle. The appellant failed to file the bundle in time and to serve it on the other party. In considering the appellant’s application for relief from sanctions, the court noted that although it was not expressly stated on the relevant order that the appeal bundle had to be served, the solicitors must have been aware of that requirement.

While this case did not concern a claim against the appellant’s solicitors, the court’s comments implied that they should have advised of the need to serve the appeal bundle, even if their retainer was limited to assisting with its preparation.In Minkin v Landsberg [2015] EWCA Civ 1152, a solicitor acting under a limited retainer amended a consent order reflecting the terms of an agreement. The solicitor was not deemed to be under a duty to provide broader advice about the merits of the agreement, despite having failed to set out precisely the limits of the retainer.

In contrast, in Heather Mary Padden v Bevan Ashford (a Firm) [2013] EWCA Civ 824, the solicitors were found to have acted negligently by failing to properly advise a client about the risks of executing documents signing away her interest in her marital home. Here, a newly qualified solicitor met the client initially on a ‘no-charge’ basis, and even advised the client not to execute the documents.

Extended duties

Whether a solicitor has assumed a responsibility to advise on additional matters as a result of their conduct is a further issue. In Caliendo and another v Mishcon de Reya (A Firm) and another [2016] EWHC 150 (Ch), the court held that the solicitors had not been retained, expressly or impliedly, to act for the claimants but found that the solicitors did owe a limited duty, arising from an assumption of responsibility.

More recently, in Denning v Greenhalgh Financial Services Ltd [2017] EWHC 143 (QB), the court concluded that an extended duty to advise will only arise in obvious cases where there is a strong connection between the retainer and the matter on which it is said the professional should have advised.

Possibility of reform

There are calls for legislative reform to protect solicitors against liability for acts or omissions that fall outside the scope of their retainer. Such reform is unlikely in the near future, if at all.It has been suggested that the SRA should produce a standard form of limited retainer to be used when providing unbundled services. However, it is difficult to conceive of a standard form that would be appropriate across practice areas.

It has also been argued that the SRA should revise the requirement on firms to hold PII cover of at least £2m (£3m for incorporated firms) and the restriction on excluding liability to clients below that minimum level when working under a limited retainer. In particular,it is argued that solicitors should be permitted to limit liability to clients to a lesser sum in cases where they are undertaking discrete pieces of work and charging relatively small fees.

Solicitors should approach limited retainers with caution. Even if care is taken to construct clear limits to a retainer, these limits may not withstand intense judicial scrutiny, particularly if the client has suffered loss and the solicitor is seen as the party with the deepest pockets.

Even if the scope of the retainer is expressly limited, a court may find that the solicitor has assumed additional responsibilities towards the client as a result of their conduct.

Francesca Kaye is a partner at Russell-Cooke and an LSLA committee member. Ricky Cella is an associate solicitor at Russell-Cooke and a Junior LSLA member

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