ADVISING YOUR CLIENT ON LITIGATION RISKS 4: THE SCOPE OF THE SOLICITOR’S RETAINER: TURN DOWN AN OFFER OF £500,000 AND LOSE – THREE TIMES

In  Lyons v Fox Williams LLP [2018] EWCA Civ 2347 the Court of Appeal turned down the claimant’s appeal.  The claimant had been unsuccessful in an action for professional negligence against a firm of solicitors. He was equally unsuccessful on appeal. One feature of this case is that the claimant had turned down an offer of £500,000 to settle the action. The case is useful reading for solicitors as it involved consideration of the scope of the solicitor’s retainer.

” …the solicitor’s obligation to bring to the client’s attention risks which become apparent to the solicitor when performing his retainer does not involve the solicitor in doing extra work or in operating outside the scope of his retainer.”

THE CASE

The claimant had been unsuccessful in a claim for professional negligence against the defendant.  Some of the defendant’s lines of defence had not succeeded, however the claimant had still recovered nothing. The first judgment is available here. 

THE SUBSEQUENT DECISION AS TO COSTS

In a later judgment Turner J turned down the claimant’s application for an “issue based costs order”.  The defendant had not succeeded on every line of its defence, however the claimant had recovered nothing.  One significant factor was that the claimant had turned down a Calderbank offer of £500,000.

THE APPEAL

The appeal, against the substantive decision not the judgment on costs, was unsuccessful.   The appeal judgment itself contains a summary of the solicitor’s duty to warn and advise in relation to matters outside the retainer.

1. The difficulty about the first line of argument is that it seems to me to fly in the face of the judge’s findings of fact about the scope of the retainer. It is, I think, worth emphasising that although cases like Minkin are often cited as authority in support of a legal duty to warn, they are in fact decisions about the scope of a solicitor’s duty based on a particular retainer. As Laddie J explained in his judgment in Credit Lyonnais which was approved in Minkin, the solicitor’s obligation to bring to the client’s attention risks which become apparent to the solicitor when performing his retainer does not involve the solicitor in doing extra work or in operating outside the scope of his retainer. The risks in question are all matters which come to his attention when performing the tasks the client has instructed him to carry out and which therefore as part of his duty of care he must make the client aware of.

2. Neither Credit Lyonnais nor Minkin are authority for the proposition that the solicitor is required to carry out investigative tasks in areas he has not been asked to deal with however beneficial to the client that might in fact have turned out to be. Mr Custance could not have advised Mr Lyons about his rights under the LTD policies or any relevant time limits in relation to the claims unless he had carried out a thorough examination of the policies and a certain amount of legal research. Although Mr Custance received documentation relating to the LTD policies including copies of the policies themselves, the judge has found that he was never instructed to do this and Mr Lyons has been refused permission to appeal against the judge’s findings in this respect.

LITIGATION RISKS

The claimant has turned down an offer of £500,000. Lost a seven day trial in the High Court; lost an application in relation to costs and lost on appeal. I would not like to speculate on the costs involved, probably as high as the £500,000 that was turned down. The case is a working example of the risks of litigation.