Divorce settlements have attracted a number of professional negligence claims recently. In Sharon Minkin v Lesley Landsberg [2015] EWCA Civ 1152, the Court of Appeal handed down a positive decision for insurers and insureds alike.  The Court of Appeal found that the defendant firm had successfully limited its retainer to putting in place the terms of a settlement and did not have a duty to advise on the appropriateness or otherwise of that settlement.

The facts

The husband and wife (both financial professionals) married on 1 September 1999. They separated on 11 November 2007, and shortly after filed for a divorce.  They entered discussions in relation to the split of their assets. In 2009 they reached an agreement as to both the division of assets and their future financial arrangements.  They recorded this agreement. 

Before presenting the draft consent order to the court, the wife had second thoughts and consulted solicitors (not the Defendant).  The solicitors set out the wife's options including that she could seek further disclosure from her husband before agreeing the settlement.

The wife did not take up that advice and the draft consent order was sent to court for its approval. The Deputy District Judge refused to approve the order, requiring a number of amendments.  As a consequence the court approval hearing was adjourned to 7 April 2009.

Following the hearing, the wife consulted new solicitors.  The wife outlined the matters which had been agreed and asked them to put the consent order into proper form so that it could be approved by the court. The solicitors sent two letters to the wife, the substantive second letter confirmed their instructions; broadly that they would redraft the consent order for court approval.  It did not say that the firm's retainer did not extend to advising on the appropriateness of the agreement reached.

The solicitors corresponded with the husband's solicitors and a draft consent order was filed in March 2009. The consent order was subsequently approved.  However, a number of problems arose and litigation ensued between the husband and wife. The wife in particular began to regret the consent order and blamed the solicitors. She alleged that had the solicitors given proper advice then she would not have submitted to the consent order, and would instead have obtained a more favourable settlement with her husband.

The wife issued proceedings against the solicitors.  The High Court found for the solicitors on the basis that their retainer was limited to putting in place the terms of the settlement.  The wife appealed that decision.

The Court of Appeal approached the case by asking what was "the extent of the solicitors' duty to advise in circumstances where the parties had reached agreement and solicitors were being asked to put the agreement into proper form for approval by the court"The Court of Appeal after citing a number of cases discerned the following principles:

  • a solicitor's contractual duty is to carry out the task which the client has instructed and the solicitor agrees to undertake;
  • it is implicit in a solicitor's retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out.  In determining what advice is reasonably incidental it is necessary to have regard to all the circumstances of the case, including the character and experience of the client;
  • it is not possible to give definitive guidance in relation to what advice is reasonably incidental, but the court gave the following illustration: "An experienced businessman will not wish to pay for being told what he or she already knows. An impoverished client will not wish to pay for advice which he or she cannot afford. An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client"
  • the solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor's retainer. As a matter of good practice, the solicitor should confirm any limitation in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed.

The Court of Appeal applied those principles to the facts of the case.  It referred to the fact that (1) the wife had previously instructed other solicitors who had provided her with a number of options which she ignored and (2) the wife's instruction to the solicitors was to put in place the agreement in a form that the court would approve.  Although on the facts the solicitors had not expressly confirmed the limited nature of their retainer, the trial judge had accepted the limited nature of the wife's instructions and the Court of Appeal had no reason to go behind that finding.

The Court of Appeal then addressed the wife's argument that despite the limited nature of the retainer, the solicitors should have warned her that they were not advising about the merits of the agreement, the agreement was itself unfair and they had made no investigation into the husband's means and assets. The Court of Appeal addressed this question by asking whether or not such advice was reasonably incidental to the work which the solicitors were carrying out under their limited retainer. The Court of Appeal concluded that the firm's scope of duty did not extend to such issues given the fact that these issues were obvious to the wife, she was an intelligent woman being a financial professional and had already taken advice from another firm.

The Court of Appeal was keen to emphasise the context in which divorce cases are today often handled by solicitors in the light of the removal Legal Aid from divorce proceedings.  Increasingly solicitors are instructed sparingly to put in place an agreement or draft the request for disclosure; they are not instructed to consider wider issues such as the appropriateness of the settlement itself.  Lady Justice King said "there would be very serious consequences for both the courts and litigants in person generally if solicitors were put in a position that they felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise of a document may lead to them having imposed upon them a far broader duty of care requiring them to consider and take it upon themselves to advise on aspects of the case far beyond that which they believe themselves to have been instructed". 

We have seen an increasing number of professional negligence claims arising out of divorce proceedings.  The Court of Appeal's decision that, irrespective of the Defendant solicitor having failed to observe best practice and set out the limits of their engagement in a client care letter, the retainer was still limited is to be welcomed.  However solicitors should heed the warning that if they are instructed on a limited basis they should be clear in terms of both what they instructed to do and the limitations of that instruction.