Solicitor-Client Retainer Agreements

Introduction

• The 'retainer', is the contract between a solicitor and a client, governed by general law and professional conduct obligations.
• Accepting instructions, refusal of instructions to act, duties to clients, client authority, retainer termination, and liens are key elements of the contract.

Accepting Instructions

• Terms are implied by law or professional conduct, but basic terms must be understood by the client.
• It is good practice to confirm instructions in writing to avoid misunderstandings.
• Managing client expectations early on reduces later issues.
• Solicitors must identify who they are acting for, especially when dealing with company directors.
• Identifying the client helps meet duties and avoid fraud involvement
• P&P Property Ltd v Owen White & Catlin LLP and Another; Dreamvar (UK) Ltd v Mishcon De Reya and Another [2018] EWCA Civ 1082 are cases that serve as warnings about fraud prevalence and the need for solicitor vigilance.
• Solicitors must take steps to establish who they are dealing with at the outset to reduce the risk of fraud.
• They must obtain satisfactory evidence of client identity per Money Laundering Regulations 2017.
• Solicitors can receive instructions from a third party on behalf of a client if properly authorized.
• Solicitors only act on instructions from the client or someone authorized on their behalf as per the Code of Conduct for Solicitors Paragraph 3.1.
• A lack of authority can result in personal liability for costs in litigation matters.
• Warner v Masefield [2008] EWHC 1129 (Ch): A firm breached implied authority by acting on instructions from only one trustee without authority from the other, and was ordered to pay costs.

Refusal of Instructions

• Solicitors can refuse to act for clients, like those known for not paying fees.
• Freedom to accept/decline instructions is limited by professional conduct and general law.
• Solicitors must not unfairly discriminate based on race or gender.
• Solicitors must not act if instructions do not represent the client’s wishes, especially with vulnerable clients.
• Steps should be taken to ensure instructions represent the client's genuine wishes.
• Solicitors can seek High Court assistance if clients are under duress.
• When legal authority exists but client instructions cannot be obtained, the solicitor must protect the client's best interests.

Duty to Act in Client's Best Interests

• Principle 7 states that a solicitor must act in the best interests of each client
• Instructions should not be accepted where there is own interest conflict, conflict of interest, or material confidential information for existing/former clients.
• Solicitors must consider service competence, timeliness, and client attributes.
• Solicitors must asses whether they are able provide adequate service to the client
• Solicitors should not accept instructions if they lack time, resources or the expertise to deal with the client's matter

Gifts from Clients

• There may be situations where a client proposes to make a gift of significant value to a solicitor, a member of the solicitor's family or to a member of the solicitor's firm etc.

• The solicitor may be asked to draft a will that includes a significant gift to the solicitor.

• Careful consideration should be given to assess the appropriateness of accepting instructions and advising the client to take independent legal advise.

• Solicitors should carefully consider any gift to determine whether it may be considered significant in the particular circumstances A gift is considered significant if:

• It is worth more than 1% of the client's current estate

• It may become valuable at some point, especially after death

• It provides a benefit to an individual which is more valuable than their relationship to the deceased reasonably justifies

• Drafting a will which includes a significant gift to the solicitor gives rise to the potential for an own interest conflict (Paragraph 6.1) (see Chapter 7)

• SRA guidance says that the Paragraph 6.1 prevents the solicitor from action unless the client has taken independent legal advice

• Each case must be considered on its own facts

• An example of where it may still be appropriate to draft the will, is where the solicitor is drafting wills for the solicitor's own parents and the survivor of them wishes to leave the residuary estate to the solicitor and their siblings in equal shares

Compliance with Law and Code of Conduct

• Solicitors must uphold the rule of law and proper administration of justice per Principle 1.

• Refuse any instructions that compromise the law or Code of Conduct for Solicitors.

• Solicitors must be able to justify that instructions do not comply with the Code, these include instances where:

• There is a conflict of interest between solicitor and client, or between two or more clients

• The solicitor holds material confidential information for existing or former client which is relevant to a new instruction

• The client instructs the solicitor to mislead or decieve the court

• Solicitors must be able to justify decisions to demonstrate compliance with SRA's regulatory arrangements in accordance with Paragraph 7.2

Duties During Retainer

• Common law and professional conduct prescribe duties throughout the retainer.
• A duty of confidentiality will continue even after the retainer has geen terminated

Duty of Reasonable Care and Skill

• The Supply of Goods and Service Act 1982 s13 provides that provides of services will carry out said services with reasonable care and skill
• This term is implied into the retainer
• A solicitor may be sued for a breach of contract if term is breached.
• The implied term does not apply to advocacy services provided before a court, tribunal, inquiry or arbitrator (Supply of Services (Exclusion of Implied Terms) Order 1982 (SI 1982/1771), art 2)
• Solicitors may be sued for negligence in both contentious and non-contentious proceedings
• In Arthur JS Hall & Co v Simons [2002] 1 AC 615 it was established that an advocate will be liable for action for negligance if they breach duty of care within court proceedings

Duty to act in the client's best interest

• In accordance with Principle 7 a solicitor must act in the best interest of the client professionally

Fiduciary Relationship and Undue Influence

• The solicitor-client relationship is labelled as a Fiduciary Relationship
• The solicitor must put the interests of the client before their own
• If a solicitor refers a client to a third party and takes a commission, the duty to account is mirrored by Paragraph 4.1
• The presumption of undue influence may be rebutted only if the solicitor makes full disclosure of all relevant facts, ensures client takes independent legal advice, and ensuring that dealings were fair and at arm’s length.
• The solicitor must no take take advantage of the client, in accordance with Principle 5.

Confidentiality and Disclosure

• Solicitors have duties to keep the client's affairs confidential
• Duty continues even and where the retainer has been terminated
• Solicitors must disclose all relevant information to the client

Client Care and Costs

• Solicitors must provide information on costs and other information to enable the client to make informed decisions
• Solicitors must deal with clients matter in a competent and timely manner and take account of the client's attributes and circumstances.

Authority

• A solicitor may derive authority from the retainer to bind the client in certain circumstances
• Express instructions should always be taken from the client prior to the solicitor taking any step in the proceedings or matter.

Termination of Retainer

• A retainer may be terminated by either party or by the general law like any contractual relationship.

Termination by the Client

• Clients may terminate a retainer at any time for any reason.
• The client will still be liable to pay the solicitor's fees for work up until the point of termination
• A solicitor may require that their costs are paid before forwarding the file to the client.

Termination by Solicitor

• A solicitor must justify any decision to terminate the retainer having regard to their obligations under the SRA's regulatory arrangements Good reasons for terminating the retainer may include:

• Complying with client's instructions would involve the solicitor in a breach of law or Professional Conduct

• The solicitor cannot obtain proper instructions from the client

• There has been a breakdown in confidence within the relationship between solicitor and client

• Good practice indicates that a client be provided with reasonable notice for termination.

• What amounts to reasonable notice will depend on the circumstances.

• It is unlikely to be acceptable to stop acting for the client immediately before a court hearing.

Termination by law

• The retainer will be terminated due to law where a solicitor is declared bankrupt or either party loses mental capacity after the retainer has commenced.
• Where a solicitor does not practice as a sole practitioner the being declared bankrupt will have minimal practical effect, as one of the solicitor's partners or other colleagues will take over
• Where a client loses mental capacity the solicitor should have regard to the Mental Capacity Act 2005

Responsibilities on Termination

• As a matter of good practice, a solicitor should confirm to the client in writing that the retainer has been terminated
• Steps should be taken to deal with the client's property being held by the solicitor
• The solicitor may hold client monies and those should be returned with any interest
• The solicitor will have to deal with the paperwork, where the client has instructed another firm of solicitors, it may be advisable to retain a copy of the file.
• The solicitor should also consider the client's rights and obligations under the Data Protection Act 2018

Liens

• A lien is a legal right that allows a creditor to retain a debtor's property until payment
• A solicitor may hold property already in possession, such as client's papers, until the solicitor's proper fees are paid.
• Solicitors may accept an undertaking to pay the costs and instead of retaining client's papers under a lien.
• According to s68 Solicitors Act 1974, the court has to power to order the solicitor to deliver up any papers to the client, the SRA also has to power where it has intervened in a solicitor's practice.
• Under s73 Solicitors Act 1974, a solicitor may apply to court for a charging order over any personal property of the client recovered or reserved by the solicitor within litigation proceedings.
• The the charging order may recover the solicitor's taxed costs for those proceedings