A law firm that narrowed the scope of its retainer after a divorcing woman negotiated her own financial settlement was nonetheless negligent in failing to give her advice on the deal, the High Court has ruled.
Her Honour Judge Coe KC, sitting as a High Court judge, ordered Essex-based Cunningtons to pay Joanne Lewis £400,000.
The firm had enough information – particularly that the husband’s pension was the main asset of the divorce – to have advised her to seek a pension-sharing order, even though the disclaimer it had added said it could not advise without the husband’s financial disclosure, which had not been received.
Ms Lewis came out of the divorce agreement with about £30,000 when, with a pension-sharing order, it would probably have been £500,000.
The solicitor/client relationship had begun with a general retainer, but after Ms Lewis reported the terms of the proposed agreement she had discussed with her husband, her solicitor said she could not comment on whether or not it was fair or reasonable in the absence of financial disclosure.
She required Ms Lewis to sign a disclaimer confirming that she understood this.
The firm remained involved to agree the consent order, by which time another solicitor had taken over the matter and there had been an exchange of statements of financial information. But still no advice was given.
Some years later, Ms Lewis responded to an advertisement on unfair divorce settlements and contacted Divorce Lifeline. This led to the negligence claim, arguing that a court would have made a 50% pension sharing order.
HHJ Coe found that Ms Lewis was an unsophisticated and vulnerable client, which the solicitors should have known – Ms Lewis told them she had to call the police to the family home on many occasions due to her husband’s behaviour and she reported he was pressuring her to agree the settlement.
This should have informed the scope of their duty to her, the judge said.
Ms Lewis “really wanted some advice and was very uncertain as to what to do, but every time she had contact with the defendant, she was told, and sometimes more than once that it could not advise her”.
This caused her to believe “not unreasonably (given her own vulnerability and inexperience)”, that she could not ask the solicitors for any advice at all.
HHJ Coe concluded that, with a 23-year relationship, no property ownership and the husband’s pension by far and away the largest asset, “a court would almost as a certainty have made a pension-sharing order and that the inevitable starting point (and probable finishing point) would have been an equal division of that pension fund”.
That likelihood was “so strong” that Ms Lewis should have been advised “in the clearest possible terms that that was the course she should pursue”. The firm should also have served a Form P (the pension inquiry form).
Cunningtons “did not need full disclosure to provide advice in those terms”, the judge said.
It was not enough for the firm to have told her that the agreement may be unfair; it should have set out a comparison between what she would receive through the proposed settlement and what she would reasonably receive if she pursued the matter to court.
“In short, she should have been advised that she was foregoing the opportunity to be awarded several hundreds of thousands of pounds…
“I find that any reasonably competent solicitor would have advised the claimant that the proposed settlement order was obviously and exorbitantly one-sided in the husband’s favour, giving the claimant less than 15% of the disclosed matrimonial assets and leaving her with an inadequate financial provision in the future, and particularly in retirement.”
As well as being negligent, this was a “clear breach of duty”, the judge went on, and Ms Lewis would have followed the advice had she been given it.
The judge assessed quantum at £400,000 on the basis that Ms Lewis would probably have accepted an offer from her husband at that level.
She rejected too a claim of contributory negligence, which was based on Cunningtons’ argument that it had offered ‘low-cost’ or ‘budget’ representation and so Ms Lewis had to take some responsibility.
“The cost of representation clearly will be limited by the extent of the work the solicitor is required to do, and the grade of solicitor doing it. That does not lower the standard of care imposed when carrying out the work within the remit of the retainer,” HHJ Coe said.