Kerry Underwood

NO GENERAL RIGHT TO CHARGE BEFORE END OF CASE

leave a comment »


In Gill v Heer Manak Solicitors [2018] EWHC 2881 (QB) (30 October 2018)

the Queen’s Bench Division of the High Court held that a firm of solicitors which ceased trading and terminated a client’s retainer without reasonable notice was not entitled after that termination to recover any costs for work done prior to the termination.

The defendant firm of solicitors acted for the claimant client in litigation.

Four months before the trial date it ceased trading as it was unable to obtain professional indemnity insurance.

It informed the client of this and, without consent, transferred the file to another firm of solicitors.

The retainer enabled the firm to terminate its on “reasonable notice” and to charge fees even though the work, the entire obligation, had not been completed.

The Master at first instance held that in the circumstances no notice was “reasonable notice” finding that it was not commercially sensible for a firm to give advance warning of a risk that it might close down due to an inability to get insurance.

Over three years after it had ceased trading the firm made a claim against the claimant/client for costs.

On appeal the High Court held that the Master had erred in making assumptions about the firm’s predicament in the absence of factual evidence, emphasizing the need to consider the client’s perspective and to balance the interests of both sides in order to consider the objective test of reasonableness.

The client had been left without cover during a holiday period,  just days after a tight timetable had been imposed at a Case Management Conference.

The High Court questioned whether the replacement firm had the necessary expertise and doubted that the firm had authority to transfer the file.

The High Court also set out the law in relation to solicitors’ retainers:

“13. A solicitor’s retainer to conduct litigation is an example of what, although known as an “entire contract”, is better described as involving an “entire obligation”: see Vlamaki v Sookias and Sookias [2015] EWHC 3334 (QB)[2015] 6 Costs LO 827 at paragraph 10. The “entire obligation” is, in effect, a condition precedent which must be satisfied before remuneration can be claimed: a solicitor can generally only claim remuneration when all work has been completed, or when there is a natural break. That, however, is subject to a common law exception and to any agreement to the contrary.   

Here, the relevant part of the retainer stated:

“[29] We may decide to stop acting for you only with good reason, for example, if you do not pay an interim bill or comply with our request for a payment on account. We must give you reasonable notice that we will stop acting for you.

[30] If you or we decide that we will no longer act for you, you will pay our charges on an hourly basis and expenses.”

The example of failure to pay an interim bill, or comply with a request for a payment on account, is the common law exception referred to in paragraph 13 of the judgment.

Any notice must be reasonable. There may be occasions when no notice is reasonable, for example because of the death or bankruptcy of a solicitor.

Comment

This is a fact specific case where the solicitors produce no evidence.

However, it is a useful reminder that litigation contracts, whether or not under a Conditional Fee Agreement, are entire contracts and there is no general right to charge anything before the end of the case, unless that is contractually provided for.

Advertisements

Written by kerryunderwood

November 26, 2018 at 6:31 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: