The Court of Appeal's recent decision on Sharon Minkin v Lesley Landberg (Practising as Barnet Family Law)  EWCA Civ 1152 considered the nature and scope of a solicitor's duty when acting under a limited retainer. This decision will provide some comfort to solicitors and their PI insurers in a market where changes to funding arrangements mean that solicitors are increasingly retained on "one off" or limited retainers.
The Claimant, a Chartered Accountant, married in 1991 and worked with her husband in his financial management business. They had three children. In 2007 they decided to divorce but remained living together in the matrimonial home.
In 2009 the couple reached agreement on assets and future financial arrangements, recorded in "Minutes of Agreement to Consent to an Order" (the Agreement). The Claimant then had second thoughts and instructed solicitors Tilley & Co (Tilley). Tilley advised that the terms agreed were unsatisfactory and set out a number of options on the way forward.
Relations between the couple deteriorated culminating in the Claimant (through Tilley) asking her husband to move out of the matrimonial home and claiming that the Agreement had been reached under duress.
Despite this, the Claimant and her husband presented the draft Consent Order to Barnet County Court for approval. The Court refused as the District Judge required further details of the husband's debts included in the Order.
The Claimant approached the Defendant Solicitor to assist in rectifying deficiencies with the Order so that it would be approved by the Court. The Defendant explained that she was acting under a legal help scheme which covered the costs of one meeting and a limited amount of legal work. The Defendant then advised on the Order, to include issues on enforceability given the husband's intention to move to the USA. The Claimant acknowledged the risks but indicated that she simply wanted the matter to be concluded as quickly as possible.
Tilley's file was released to the Defendant and the Order was finalised and approved. However, the Claimant decided that the Agreement was not to her advantage and litigation ensued between the couple.
The Claimant subsequently brought proceedings against the Defendant Solicitor claiming she had not provided adequate advice on the Consent Order and that, had she been properly advised, the Claimant would not have agreed the Order and would have achieved a more favourable settlement.
The Defence focussed on the scope of the retainer, with the Defendant arguing that she had simply been instructed to finalise an agreement which had already been reached and upon which the Claimant had been advised. The District Judge at first instance dismissed the claim on the basis that, broadly:
- The retainer was limited to drafting the Order in an appropriate form for the Court which was done.
- The Claimant had been advised on the Agreement by another firm of solicitors and she decided to proceed despite having been advised and despite understanding, as a sophisticated individual conversant with both litigation and finance, that it could be disadvantageous to her.
- The Defendant was not on notice of the Agreement having been reached under duress and was under no obligation to investigate this issue further, despite being in possession of the file before the Consent Order was approved by the Court.
The Claimant appealed on the grounds that the District Judge had been wrong to find the Defendant's retainer was limited in such a way and that she had a duty to provide broader advice in respect of the Consent Order, including advising on the merits and fairness of the Agreement and carrying out investigations into the husband's means and assets.
Lord Justice Jackson summarised the relevant principles in respect of the extent of a solicitor's duty to advise:
- A solicitor's contractual duty, and resulting scope of their duty in tort, is based on what they have been instructed to do and what they have agreed to undertake.
- The solicitor will advise on what is reasonably incidental to the retainer.
- In determining what is incidental it is necessary to consider the factual matrix of the case, including the "character and experience" of the client.
- The solicitor and the client may agree to limit the scope of the retainer to exclude duties which would otherwise normally be part of such a retainer. It is good practice to record such an agreement in writing.
Taking into account these principles, and having regard to the circumstances and the nature of the Claimant, he dismissed the appeal on the following grounds:
- It was obvious to the Claimant that the Agreement may be disadvantageous and unfair to her and that further investigations into her husband's means and assets could have resulted in a more favourable agreement.
- The Claimant was a sophisticated individual who understood finance and litigation and the complex issues at hand.
- She had already taken advice on the subject matter of the Agreement from Tilley and the Defendant knew this.
- The Claimant understood and was advised upon the Agreement by Tilley and had decided to proceed despite advice to the contrary.
Lord Justice Jackson also found that it was not reasonable for the Defendant to have investigated the duress issue as she was never made aware of it before preparing the Order and it was also not reasonable for her to have read Tilley's file the day she received it, the Order having been approved the following day.
The Court of Appeal therefore concluded that the scope of the duty was limited and the Defendant Solicitor was not under a duty to investigate and advise further. He also concluded that had the Defendant been found negligent the claim would have failed for causation as the Claimant would not have been able to prove she would have acted differently had she received advice from the Defendant.
With pressure on funding of legal costs, parties often find themselves negotiating settlements by themselves and only instructing solicitors when it comes to recording terms agreed, particularly in family proceedings following the termination of legal aid for financial remedies This Judgment will provide some comfort to solicitors in situations where, as is frequently the case in negligence claims, the client has reached an ill-considered decision and then takes the view that the easiest way to recoup his losses is to claim against solicitors and their professional indemnity insurers as the "low hanging fruit".