Switching off the client relationship

There are many examples of the solicitor/client relationship breaking down and situations when the solicitor may, within his rights, decide to terminate the retainer. One such example may be an inability to obtain clear instructions from the client; another may be where the client's bills remain unpaid. But what about less extreme scenarios?

As we are all too well aware, clients have the right to hire and fire solicitors at will. The same right does not extend to the profession. Faced with a decision of whether to terminate the retainer the solicitor must consider his position carefully. But where can he turn for help? Understandably his first port of call may be the Solicitor's Code of Conduct. However, he will be disappointed with what it has to offer.

The Code provides that a solicitor 'must not cease acting for a client except for good reason and on reasonable notice'. The guidance note provides only two examples of what may amount to 'good reason', namely:

- where there is a breakdown in confidence between solicitor and client; and

- where a solicitor is unable to obtain proper instructions.

Where to next?

The Law Society runs a professional ethics helpline, but unfortunately it is increasingly becoming the case that the advice given by the individuals who man the helpline fails to survive the scrutiny of the Solicitors Regulation Authority. It was certainly given little credence by the court when relied upon by the claimant solicitor in the matter of Richard Buxton (a firm) v Mills-Owen [2008] EWHC 1831 [QB], as reported on solicitorsjournal.com on 12 August 2008.

Richard Buxton acted for Mr Mills-Owen in connection with a statutory appeal concerning the grant of planning permission.

It became obvious from an early stage that Mr Mills-Owen wanted to pursue the appeal on a basis that could not succeed. Both Buxton and counsel advised to that effect. Mr Mills-Owen rejected this advice.

Shortly before the scheduled appeal hearing, comforted by the advice of Professional Ethics, Buxton terminated the retainer.

RB presented Mr Mills-Owen with a bill to the date of termination. He refused to pay.

The costs judge disallowed Buxton's claim for profit costs in its entirety saying, among other things, that the nature of a solicitor's retainer is one of an 'entire contract' that Buxton had not fulfilled.

On appeal, Buxton argued that the 'entire contract' principle was antiquated and out of touch with modern practice '“ the principle emanates from the 1894 decision in Underwood Son & Piper v Lewis [1894] 2 QB 306.

The solicitor sought to persuade the appeal court that more flexibility was required to reflect that a solicitor was prepared act for a client to the conclusion of a matter providing that he believed the client had a case and the client acted reasonably at all times.

The court scrutinised Buxton's retainer letter and said that it made it clear that Buxton had agreed to carry out the whole job, that is until the conclusion of the statutory appeal.

The court found that the performance of the contract was still achievable notwithstanding the disagreement between Buxton and Mr Mills-Owen over the approach.

Mr Mills-Owen was prepared to pay for the case to be advanced on a particular basis, which Buxton could do without any impropriety on his part. Buxton did not therefore have just cause to terminate the retainer.

Define and redefine the job

The decision provides the profession with greater guidance, whatever the funding arrangement might be, on when it is permissible to terminate a retainer '“ an area where there have been few recent decisions. The courts look first at the scope of the retainer. This is where many solicitors fall down: they forget to define the job they are doing for the client and, if the job changes, to redefine it throughout the currency of the matter. Where there is doubt, invariably the courts will favour the client.

Consideration will then be given to the bargain struck by the parties, that is in what circumstances did the solicitor and client agree that the contract could be ended? Very few client care letters provide for circumstances in which the solicitor may end the retainer. All too often the focus is on other information required under the Code. While that information is undeniably essential, it will not assist the solicitor faced with the all too common scenario that confronted Buxton.

Solicitors with conditional fee agreements (CFAs) will most likely be better placed.

CFAs tend to cover situations when the solicitor can terminate the retainer, although they tend to be cost focused.

However, certain agreements fall short of dealing with the scenario where the client does not accept advice, and could therefore leave the solicitor in the invidious position of having to fund the case to trial notwithstanding his views on the merits and the potential exposure to costs.

What is abundantly clear is that a lacklustre approach when defining the retainer can have dire consequences for the solicitor. The profession needs to address more closely the way in which it deals with the issue of the retainer from beginning to end. Each case will differ. To avoid difficulties down the road, the solicitor needs to consider the possibilities at the start and provide for them in the client care letter and terms of business. In this situation, as with many, precedents make good servants but bad masters.