Kerry Underwood

SOLICITORS OWE NO DUTY TO FUNDERS TO REPORT COUNSEL’S ADVICE ON PROSPECTS OF SUCCESS

with 2 comments


The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

In

Hall v Saunders Law Ltd & Ors [2020] EWHC 404 (Comm)

the Commercial Court allowed the defendant solicitors’ application for summary judgment in relation to a claim against them for breach of a funding agreement and breaches of a duty of care or fiduciary duty.

The court found that, under the terms of the funding agreement, the solicitors did not owe any duty to the funder to report pessimistic views expressed by counsel and it was not appropriate to imply any equivalent duty of care or fiduciary duty.

The claimant in the funded action entered into a tripartite funding agreement with the funder and its solicitors, and that action was lost.

The funder went into liquidation and its claims in relation to the funding agreement were assigned to the claimant.

The claimant alleged that the solicitors failed to communicate pessimistic advice received from counsel as to the prospects of success of the funded action, in breach of either the terms of the funding agreement, a common law duty of care, or a fiduciary duty owed by the solicitors to the funder to cease to act for the claimant, if it knew that the claimant was refusing to pass relevant information to the funder, or failing to instruct the solicitors to do so.

The High Court held that there was no freestanding reporting obligation on the solicitors.

There was no basis for implying such an obligation as the funding agreement did not lack commercial or practical coherence without it; reporting obligations on the claimant already provided protection for the funder.

The court noted that the fact that the parties were in a contractual relationship meant that he did not have to consider what duties may have been owed at common law in the absence of a contract.

Further, there was no basis for imposing any fiduciary duty on the solicitors.

The particular wording of the funding agreement in question was key to this decision.

Following this case, funders may seek to impose express reporting obligations on solicitors where that is not current practice.

Written by kerryunderwood

March 11, 2020 at 9:22 am

Posted in Uncategorized

2 Responses

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  1. Debatable whether there shouldn’t be a duty of care. As long as the Claimant’s don’t end up on the hook to the Solicitors for the Funder’s debts though.

    Anonymous

    March 11, 2020 at 1:09 pm

    • Think that there must be a duty of care. Inherent tension as well between solicitor wanting to proceed as externally funded. If acting on a Conditional Fee Agreement suspect solicitor would have reported counsel’s advice to partners, so what is the difference/
      Kerry

      kerryunderwood

      March 11, 2020 at 2:07 pm


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