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11 May 2010
There are few circumstances in which a solicitor wants to stop acting for a client, but such a situation may arise if fees are unpaid or instructions cannot be obtained. In such cases a procedure must be followed in order to come off the record and recover fees.
In Underwood, Son & Piper v Lewis(1) it was held that while a solicitor is instructed in a case, he or she must act in the action to the end. However, he or she may terminate the retainer before the end on reasonable notice and if he or she has reasonable grounds for refusing to act further. This principle is now found in the Solicitors' Code of Conduct 2007. The relevant procedure is detailed in the Civil Procedure Rules (CPR) 1998.
Under Rule 2.01(2) of the code, a solicitor "must not cease acting for a client except for good reason and on reasonable notice". Paragraph 8 of the guidance to Rule 2 provides examples of good reasons: "where there is a breakdown in confidence" or where the solicitor is "unable to obtain proper instructions".
Rule 11(3)(a) of the code informs solicitors that "you must not construct facts supporting your client's case or draft any documents relating to any proceedings containing any contention which you do not consider to be properly arguable".
In Richard Buxton (Solicitors) v Huw Llewelyn Paul Mills-Owen(2) the Court of Appeal considered that a solicitor could terminate a retainer where a client wanted to plead a case which the solicitor and counsel considered hopeless. The client had instructed his advisers to argue an appeal on the merits when the relevant legislation provided that an appeal could be made only on a procedural issue or a point of law. The case concerned the regime under the old 1999 conduct rules.
Can a solicitor come off the record if so instructed?
At first instance the judge held that a solicitor is not entitled to terminate a retainer because he or she has been instructed to do so, and decided that there must be a situation where the instructions would lead to impropriety or where the court would be misled. However, the Court of Appeal held that as no rule specifically sets out the situation in which a retainer can be terminated, each case must be considered on its facts. Although a solicitor should not take the decision to terminate a retainer lightly, it did not follow that the 'good reason' provision should be interpreted narrowly, as it had been at first instance.
The client had wished the solicitor to take points which would have been hopeless. The Court of Appeal considered that it would be contrary to the solicitors' and counsel's obligations under the overriding objective if they were to waste court time and money arguing points that they knew would fail. It was stressed that this is not the same as being instructed to argue points which have little chance of success. The key is whether a point is "properly arguable", and an appeal on the merits can clearly not be properly arguable if there is no scope for the court to reach a judgment regarding the merits on appeal. The court also found that a solicitor or counsel should not try to disassociate himself or herself from unattractive arguments by using the phrase 'I am instructed that' before making a submission with which he or she does not agree - such a course should never be taken, no matter how much a legal adviser disagrees with the instructions in question.
Under Section 65(2) of the Solicitors Act 1974, a failure by a client within reasonable time to pay a reasonable sum on account of costs of contentious business is a "good cause whereby the solicitor may, upon giving reasonable notice to the client, withdraw from the retainer".
The definition of 'reasonable notice' depends on the circumstances, but it will usually be unreasonable to cease to act for a client before a court hearing if there is no time for the client to seek alternative representation. If a solicitor has no choice but to cease acting immediately, he or she should attend and explain the circumstances to the court.
Once a solicitor ceases to act, he or she must consider what to do with the paperwork. Client files must be handed over promptly subject to the solicitor exercising a lien over them in respect of outstanding costs; undertakings should be used as an alternative where possible. It is also necessary to ensure that the client's position is not prejudiced and that the client's rights under the Data Protection Act are protected.
After notice has been given to the client that the retainer has ended, the client or its new solicitor should (i) file Form N434 with the court to notify the change of solicitor, and (ii) provide a new address for service of documents under CPR 42.2. If no such notice is filed, the former solicitor should apply to the court for an order that he or she has ceased to act (CPR 42.3). The application should be served on the former client and supported by evidence (ie, by affidavit or, more commonly, by the application notice containing a statement of truth or by witness statement).
The application notice should be served on the former client, but not on the other parties to the action, as this may injure the client.
Once the order has been granted, the solicitor should serve it on every party to the action and a certificate of service should be filed with the court. If the former client has an alternative address, this should also be given to the court.
Are fees payable to the date of termination?
In Buxton the Court of Appeal held that there had been a good reason for termination; therefore, the solicitors were entitled to their costs. This applies even where an agreement has been made for payment of a sum at the fulfilment of the retainer and the retainer is terminated before the end by a solicitor giving good reason. However, if a retainer is held to have been terminated without good reason, fees are not recoverable. This will presumably be the case even where termination was in good faith, the solicitor having believed that there was cause to terminate.
Terminating a retainer is an exceptional course of action and a solicitor should think carefully before doing so. In particular, he or she should ensure that proper notice is given and that there is good reason under the Code of Conduct or relevant case law if he or she hopes to ensure payment of his or her invoices to the point of termination.
However, there is no definitive list of good reasons and each case must be taken on its facts. Buxton appears to present a good example of instructions being as flawed as possible, yet at first instance it was decided that the solicitor was not entitled to terminate the retainer. This demonstrates the subjective nature of the question. It is hoped that the guidance set down by the Court of Appeal will assist the courts in deciding the issue of good reason to terminate a retainer in future cases.
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