COURT REFUSES TO GRANT RESTRICTIONS ON CLAIMANT’S ACCESS TO FORMER SOLICITOR’S FILE: NOT A CASE OF LIEN ON ME

In Ellis v John Hodge Solicitors (a firm) [2022] EWHC 2284 (Comm) His Honour Judge Pearce refused to place any restrictions on the disclosure of a litigation file to the claimant.  The claimant was bringing an action alleging professional negligence against his former solicitors.  Those solicitors were counterclaiming for fees owed and argued that their lien on the file should not be overridden totally.   The solicitors sought an order that the file only be disclosed to the claimant’s legal representatives. That restriction was not granted.

AVOIDING UNDERSETTLEMENT

There are aspects of the underlying case here which are of interest.  The claimant had taken the matter as far as the CCMC without seeing the original file (in a case based, basically, on allegations of failure to inform of risk).  The claimant states that he would have accepted an earlier offer of £200,000 in a case where he went on to receive £11,816.63 at trial. It is a case that highlights the careful advice that lawyers have to give in these cases where there is a concern about under-settling and yet there are always risks in litigation. This is an issue considered in a webinar on the 19th September 2022 “Avoiding Undersettlement: a Guide for Personal injury Lawyers”.  Booking details are available here.

THE CASE

The defendant firm of solicitors had represented the claimant in a personal injury case. The claimant had sought damages of £500,000.  An  offer of £200,000 had been made in the personal injury action which was declined.  At trial the claimant was awarded £11,816.63.  The decision not to accept the £200,000 was described as “disastrous” for the claimant.

THE CURRENT ACTION

The claimant issued an action for negligence against his former solicitors.  It is alleged that the solicitors failed to advise him fully about the risks of litigation, in particular the that medical evidence of the defendant would be preferred.  The solicitors defend the claim on the basis that the claimant had been fully informed of the risk.

THE ISSUE THAT AROSE AT THE CCMC

There was an issue in relation to disclosure.  The solicitors conceded that their file of papers were fully relevant to the claim.  However the solicitors declined to disclose the file on the basis that they were exercising a lien over the file in relation to outstanding fees.

THE LIEN ISSUE

The defence in the action stated

4. The Claimant has failed to enter into any meaningful discussion about the resolution of the outstanding fees, and plainly has not required sight of the underlying file before drafting his Particulars of Claim. The Defendant will say that this is misconceived and has only served to increase the costs of this litigation, since there are assertions pleaded therein that are not supported by the content of that file and should not have been pursued.

5. In the premises, and in light of the positive obligations of the Initial Disclosure pilot scheme, the Defendant makes an offer to disclose the underlying file to the Claimant’s solicitors upon provision of a solicitor’s undertaking that it will not be further disclosed to the Claimant and that it will be returned after they have had the opportunity to consider it. This arrangement is in line with that originally articulated in Robins v Goldingham [1872] LR 13 Eq 440 and recently cited with approval in Evelyn Donaghy v JJ Haughey Solicitors Ltd [2019] NI Ch 1

 

THE DECISION IN THE CURRENT CASE

The judge decided that the file should be disclosed without any undertaking being required.

    1. It is striking that the parties have been unable to find any authority on the exercise of a solicitor’s lien in this context. The Defendant says this is because issues such as this are usually resolved at the stage of a pre action application for disclosure by the Claimant. It probably is correct that most issues of this nature would arise at the stage of a pre-action application for disclosure rather than at the stage of the present case, simply because a claimant might be expected to have wanted sight of the file before deciding to issue the claim. Indeed, if the Defendant here is correct, the decision to issue without sight of the file may prove to have been ill-judged. But it seems unlikely that the Defendant’s explanation for the absence of authority on this issue can be correct. If the question of the application of the lien is normally dealt with at the stage of a pre action disclosure application, one might expect that there would be reported cases on this issue in such applications, yet none has been cited by either party. The Claimant says this is because his position is generally thought so obviously to be right that no one has raised an argument against it previously. But, if this is so, it cannot detract from the need to examine whether the assumed true position is in fact correct.
    1. The decision in Woodworth v Conroy however provides some assistance to the determination of the issues before the court. In particular it appears to support the conclusions that:
i) The court’s discretion as to ordering inspection under the Rules of the Supreme Court gave it a power to decline to order inspection of documents subject to a lien. This would appear to be an answer to the Claimant’s argument that the lien simply has no relevance in the context of disclosure issues.
ii) However, it would be inappropriate on the facts of the case to exercise the power where the person asserting the lien was suing for the fees which gave rise to the lien, the client was putting in issue the holder of the lien’s right to the fees claimed and inspection of the file was central to determining liability for the fees.
    1. Further, it would appear that, had the claimant in Woodworth properly particularised a negligence claim, that claim itself would have been a ground for ordering inspection notwithstanding the existence of the lien, if inspection of the file was necessary to the disposal of that issue (which it probably would have been).
    1. The true application of the decision in Woodworth to the facts of this case is not straightforward since the powers and duties in respect of the discovery process under RSC Part 24 are significantly different than the regime of CPR PD 51U. In particular where, as here, the documents were subject to the Defendant’s obligation of initial disclosure (since it is common ground that they are necessary to enable the Claimant to understand the claim he must meet), the obligation to produce the documents under PD51U has relatively narrow exceptions. Nevertheless, such exceptions are recognised to exist (see paragraph 5.10 of PD51U) and I therefore proceed, without having heard argument on the issue in light of Woodworth, on the basis that the court has a power to modify duties of disclosure that would otherwise arise under PD51U where the party from whom disclosure is sought has a valid lien over the file for unpaid fees.
    1. On the facts of this case, I am satisfied that it is not appropriate to allow the Defendant to continue to assert the lien so as to modify disclosure obligations that would otherwise arise, whether by requiring an undertaking on the lines sought by the Defendant or otherwise, for the following reasons:
i) The Claimant has alleged negligence on the part of the Defendant in the discharge of its duties in respect of which the fees are sought. It has not been said that the claim is inadequately particularised (as opposed to containing particulars that it is said cannot be sustained in light of the contents of the file) and there is no application before the court to strike out the claim. On the face of it, the Claimant has an arguable case that can only be understood by consideration of the documents. If the Defendant is correct, consideration of those documents will demonstrate the correctness in whole or in part of its defence. It may well be that the decision to issue without sight of the file will prove costly to the Claimant. However, the documents in the file are clearly central to the issues before the court. The Claimant cannot fairly conduct this claim without knowing the contents of the file.
ii) Whilst it is argued that a type of Robins undertaking that allowed the solicitors (but not the claimant himself) to see the file would properly balance the Defendant’s interest under the lien with the Claimant’s need to know the contents of the file, I do not consider that this is realistic. The context of discussions recorded in file notes is likely to be important in judging the evidential significance of the file notes to the claim. The Claimant cannot properly deal with the issues without knowing exactly what the documents say – and if he is told the full content of the documents, the lien would lose its value just as much as if he saw the documents themselves;
iii) The obligation under CPR 31.22 not to use documents disclosed in these proceedings for the purpose of other proceedings has the same consequence as the type of obligation which might arise from a Robins undertaking to return the file at the end of the current litigation. There is no reason to think that the one would be more protective of the lien than the other. (It might be added that the file and therefore the lien would appear to have no value other than for the purpose of the present litigation in any event.)
iv) The fact that the Defendant has counterclaimed for the fees is significant. This claim is defended in part on the basis of whether the Defendant is in fact entitled to the fees claimed, thereby putting the contents of the file directly in issue such that, as in Woodworth, it is difficult to see how the case could properly be tried without the file being disclosed. It is possible that the undertaking sought by the Defendant might be less problematic on this issue, since the defence of the fee claims on the grounds of the Defendant’s right to charge the fees is likely to be a matter largely of analysis by the lawyers and legal argument rather than evidence from the Claimant that would be potentially weakened by the fact that he had not had sight of the file. However, the risk of prejudice to the Claimant still arises, in circumstances where the Defendant has chosen to bring a counterclaim for fees against him. That is a powerful argument for holding that the lien cannot be asserted on equitable principles.
    1. Since I have not heard argument on Woodworth, it was not an authority that affected my decision expressed orally to make an order along the lines sought by the Claimant – I would have made the order in any event. Having seen the judgment in that case, it provides some support to both sides in this case, in part for the argument advanced by the Claimant as to the merits of an order for disclosure without the limitations contained in a Robins undertaking and in part for the argument advanced by the Defendant that the court does have a power to modify the disclosure order that would otherwise have been made in light of the assertion of the lien. Whether Woodward in fact remains good law having regard to the disclosure regime under the Civil Procedure Rules and the PD51U, which differs significantly from the regime under the Rules of the Supreme Court, may fall to be considered on another occasion when the issue has been fully ventilated – for present purposes I decide this case on the basis that it does indeed remain good law.

CONCLUSION

  1. For these reasons, I determine that the disclosure obligation of the Defendant includes an obligation to disclosure its file arising from the underlying claim and that the Claimant’s solicitors should not be required to a give an undertaking restricting the use to which the file is put beyond the restrictions that are contained in the CPR in any event.