Thursday 30 August 2012 by Claire Roake
We all know that a solicitor owes a duty to their client to act with reasonable care and skill in the performance of their retainer. The argument comes over the extent of that retainer.
When determining the scope of a solicitor's (or equally any other professional's) retainer, invariably the starting point is the letter of engagement which, in accordance with the Solicitors Regulation Authority's code of conduct, should be sent to clients at the beginning of each instruction. The letter should clearly describe the work to be undertaken so that both the solicitor and the client are clear about the work that is to be completed. Should the relationship break down and the solicitor subsequently face a claim for negligence, the letter may also then be useful in defending the claim, as the extent of the duty owed by the solicitor should be clear.
There can however be circumstances in which a solicitor is obliged to go beyond the strict remit of their retainer. The extent to which this can reasonably be expected has been debated by the courts in several cases. For example, in Malyon v Lawrence, Messer & Co , Brabin J stated: 'A solicitor's obligation is a continuing one while his retainer is still in operation, and I do not accept that his obligations are always dictated by, and confined to, the situation existing at the moment he first sees his client. In many cases where a solicitor is giving his continuing duty of care to the case, other circumstances may supervene that require a solicitor to take certain action.'
On the face of it this is a worrying proposition. Suddenly a solicitor, particularly one acting for the same client on a repeated basis, could find themselves assuming responsibility to advise that client generally. However, more recently the courts have shown less willingness to impose a continuing duty to advise upon professionals. In Integral Memory plc v Haines Watts  (a case concerning accountants, but the subject matter is equally relevant to solicitors), tax advice was provided to the claimant. Subsequently, a scheme to achieve national insurance savings was established. The law changed and rendered the scheme ineffective. Consequently, the claimant faced a tax bill of £100,000. The claimant argued that its accountants were under a continuing duty to advise of a change in the law and that they failed to do so. The court disagreed.
On the claimant's case the accountants should have advised about a change in the law which affected the scheme in 2003. The alleged failure after that time was to give the same advice or, put differently, a failure to remedy the existing breach, not a commission of a further breach. The six-year limitation period ran from the date of the original breach. The absence of a continuing duty meant that the claimant's claim was time-barred. This case illustrates a common reason why a disgruntled former client may be keen to argue that a solicitor is under a continuing duty to advise. If such a duty exists then the limitation period is effectively extended.
Unsurprisingly, the courts are not prepared to circumvent the Limitation Act in this way. Another recent example of the court's reluctance to expand the extent of a professional's duty is Shepherd Construction Limited v Pinsent Masons LLP, also a decision from earlier this year. The claimant in that case instructed the same individuals at the defendant solicitors numerous times over a number of years. It was argued that the continuing nature of the solicitor's instruction gave rise to a continuing duty to review the advice given previously in light of legislation and other legal developments. Again the court disagreed.
The court reiterated that it is necessary to look closely at the terms of a professional's retainer to determine the scope of the instruction. The completion of work by the same individuals or the sending out of unsolicited briefings or invitations to seminars does not give rise to the implication that there is a general retainer.
The exception is where on a true construction of the contract there is a continuing contractual obligation. For example, where there is a repairing covenant in a tenancy agreement. The obligation of the tenant or the landlord to keep the property in repair is breached afresh every day that the property is not repaired. Or in the construction field, architects and engineers may be under a duty to keep designs under review and raise any issues with the client during the defects liability period.
It is also possible that a general and continuing retainer may arise in a legal context. Akenhead J gave the example of a family solicitor who drafted a will for a longstanding client and later handled his divorce, knowing that an impending remarriage would invalidate his will. It may then be incumbent upon the solicitor at least to advise the client of this consequence.
However, more generally Akenhead J commented: 'If the existence of a longstanding relationship and the award of numerous specific commissions… gave rise by implication to an implied general retainer pursuant to which a solicitor had to keep under review all previous advice and drafting, this would have very wide ramifications for the solicitors' profession and indeed to their clients who might be expected to have to pay.'
The client would effectively be provided with an insurance policy in the sense that the client could expect the solicitor to keep him informed of anything that might significantly impact on any earlier advice. This would then generate further questions, such as: How long does this obligation go on? What happens if the partners originally involved retire? What happens if the solicitor or accountant receives no more instructions from the client? Does the general retainer continue?
So can the legal profession breathe more easily now? These recent court decisions do seem to have the effect of making the continuing duty to a client the exception rather than the rule. The answer, I am afraid to say, is that we should perhaps hold our breath for the decision of Quayle v Rothman Pantall & Co, since earlier this year the court allowed the claimant to amend his claim to plead that his accountants owed him a continuing duty on the basis that such a claim stood a real prospect of success.
The trial is listed for October.
Claire Roake is an associate at Mills & Reeve