30 January 2012

Long-standing relationship with a client does not mean a continuing retainer, High Court rules

Solicitors who have a long-standing relationship with a client and receive many instructions are not under an implied general retainer to keep under review all previous advice and drafting, the High Court has ruled.

However, different considerations “may apply where the relationship between a client and solicitor is that of being the family solicitor”, said Mr Justice Akenhead.

In Shepherd Construction Ltd v Pinsent Masons LLP [2012] EWHC 43 (TCC), the claimant argued that its continuing relationship with the national law firm (and its predecessors) gave rise to a ‘single contract’ which meant there was a continuing duty to advise on changes to the law.

Specifically, it alleged that advice given in relation to various forms of construction contract used by Shepherd should have been reviewed at a later date, which would have avoided a £10.6m claim against the company.

However, the judge listed several reasons why he could not accept that there was a single contract, including the lack of any express agreement to one, while Shepherd was billed for individual pieces of work.

He said: “A solicitor’s functions and responsibilities must primarily be determined by his or her retainer… I do not see how the placing of specific commissions on a more or less informal basis, even if there are a large number of them, can give rise to a necessary implication that there was or must be some overarching general retainer by which the solicitor is required to keep under relatively constant review all advice and drafting previously done. The very fact that there were specific commissions suggests that that is all that they were.”

Mr Justice Akenhead rejected the suggestion that the single contract could be implied from Pinsent Masons sending out unsolicited briefings or inviting the client to seminars, nor from the fact that the same people within the firm generally gave the advice.

He added: “There is something commercially and professionally worrying if professional people are to be held responsible for reviewing all previous advice or indeed services provided.” This would have “very wide ramifications for the solicitors’ profession and indeed to their clients who might be expected to have to pay”.

But he continued: “Different considerations may apply where the relationship between a client and solicitor is that of being the family solicitor. Thus, a solicitor may draft a will for a long-standing private client and later handle his divorce; knowing that an impending re-marriage would invalidate the earlier will, it may be incumbent upon the solicitor at least to advise his client of this consequence.

“However, that may be because there is on analysis a general retainer by which the solicitor is required from time to time to give advice to his client for reward.”

In a statement, London firm Beale & Company, which acted for Pinsent Masons, said: “This is a pragmatic judgment which will be welcomed by the legal profession. If solicitors were entitled to charge for keeping all earlier advice and drafting under review, that could well involve, say, once or twice a year reviewing the earlier advice and, as appropriate, writing to the client about the results of the review.

“The costs of reviewing could run into many thousands of pounds, particularly if reasonable research into legislative changes and current legal decisions was included. It is unlikely that clients would be prepared to pay for such reviews, particularly if the outcome was that the earlier advice did not need to be updated.

“A solicitor is not a form of insurance policy for a client. There is no general obligation on a solicitor to keep his client informed of any changes in the law or indeed anything which might significantly impact on the earlier advice or drafts.”

Tags: retainer