THE STEPS THAT HAVE TO BE TAKEN WHEN WORKING ON A LIMITED RETAINER: COURT OF APPEAL GUIDANCE

In Minkin -v- Landsberg [2015] EWCA Civ 1152 the Court of Appeal gave important guidance on the practical steps solicitors can taken when acting for a party under a “limited retainer”.

“It goes without saying that where a solicitor acts upon a limited retainer, the supporting client care letters, attendance notes and formal written retainers must be drafted with considerable care in order to reflect the client’s specific instructions”

THE CASE

The defendant solicitors had acted for the claimant in drawing up a consent order in matrimonial proceedings. Thereafter the claimant brought proceedings for negligence.  The action failed on the basis that the defendant solicitors were only acting under the scope of a limited retainer to draw up the order.  The claimant appealed and that appeal was dismissed by the Court of Appeal.

KEY POINTS

  • The solicitor was acting under a defined and limited retainer.
  • Her task was to to re-draft the consent order reflecting matters already agreed.
  • The solicitor was not under an obligation to warn the claimant.
  • The solicitor was not under a duty to investigate matters of duress.
  • There are strong public policy arguments in favour of allowing solicitors to work on the basis of limited retainers.
  • When a solicitor works under a limited retainer the client care letters, attendance notes and formal written retainers must be written with considerable care to reflect the client’s instructions.

THE JUDGMENT OF LADY JUSTICE KING

  1. The procedure to be followed in order to achieve a binding order in financial remedy cases is to be found in Family Proceedings Rules 2010 r9.26:Application for Consent Orders for financial remedy. The rule provides for the filing of a Statement of (financial) Information with the draft order for which the court’s approval is sought. The parties do not need to attend before the judge unless directed to do so. The judge retains complete discretion to approve or reject a draft order, or to require a fresh draft; alternatively if it is thought necessary, the judge can order a hearing with the parties in attendance.
  2. The court it follows, is not a rubber stamp, it exercises, as Lady Hale said in Sharland an “independent assessment to enable it to discharge its statutory function”. The court retains its discretion as to whether to approve an order and to make such enquiries as it thinks necessary but not to the extent, as it was put by Munby J (as he then was) in L v L [2008] 1 FLR 26, as “bloodhound or a ferret”.
  3. It may be thought that an agreement having been reached, the subsequent drafting of the order is a simple enough task – after all, it might be asked, how hard can it be to write down what has been agreed? The answer is “Very hard”. A consent order in financial remedy cases is a complex legal document which must deal with all aspects of the parties’ financial lives now and for the future; many elements of a financial remedy order apply to every case, no matter how modest or substantial the assets may be. To take some examples:
  • A pension sharing order is technical and requires a number of annexes to be filed,
  • Where the house is to be sold and the proceeds divided, the order must set out with precision what is to be deducted from the gross sale price before distribution. If the property is to be transferred to one party, provision to release the departing spouse from their covenants under the mortgage need to be made and back up arrangements set out in case a release cannot be achieved. What if there is CGT to be paid on a property, who is to pay it and what form should any indemnity take?
  • Where the wife is to have term maintenance, until, for example, the husband retires, what factors will bring the maintenance to an end prior to that date and is the order to be extendable or, pursuant to s28(1)A Matrimonial Causes Act 1973, not extendable?
  • If there is a maintenance order, is the Inheritance (Provision for Family and Dependants) Act 1975 to be excluded and if so, who is going to know the precise wording which is required in order to ensure that such a critical provision is effective?
  1. An indication of the problems which can arise is found in the present case; a case where the divorcing couple are highly educated and used to dealing with technical and complex concepts and documents, and where the husband had legal representation when the proposed consent order was first put before the court. The district judge was nevertheless obliged to reject the proposed order (twice), as, amongst other defects, the debts to be deducted from the proceeds of sale from the former matrimonial home were inadequately identified.
  2. The District Judges, more than any other level of the judiciary, are finding their lists are overwhelmed as a consequence of the increase in court time taken by each case where (as is now routinely the case) the parties appear as litigants in person.
  3. Following a contested financial remedy case where there are no lawyers representing the parties, the District Judge will draft an order which reflects his or her decision; there is no scope for ambiguity or misunderstanding as he or she knows precisely what he wishes to achieve and drafts the order accordingly. When however two unrepresented parties come before the judge with an agreement, the situation is entirely different. The district judge has neither the time, nor should he or she attempt, to interpret the minutiae of the agreement and draft/redraft the proposed consent order. That is not to say that he will not correct obvious errors and technical defects, but his task is to approve the order, not to sit with the parties and painstakingly work through with them every possible parameter of the draft in order to ensure they have considered every angle and future eventuality; to do so runs the risk that the judge will be seen to be giving advice or is seeking to interfere or undermine an otherwise unimpeachable agreement reached between the parties.
  4. In order to address this problem a number of solicitors specialising in matrimonial finance cases now offer (as they have in personal injury cases for sometime), bespoke or “unpacked” services whereby they will undertake to act for a litigant in person in relation to a discrete part of a case which is particularly challenging to a lay person. Most commonly in matrimonial finance cases, this is the drafting of the Form E (financial disclosure), or, as here, the drafting of the order. This service is invaluable to both courts and litigants alike, saving as it does court time but also stemming the increasing number of applications to the courts in relation to the working out of orders which do not accurately reflect the true intentions of one or other of the parties.
  5. 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 (albeit complex to a lay person) 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 to which they believe themselves to have been instructed.
  6. It goes without saying that where a solicitor acts upon a limited retainer, the supporting client care letters, attendance notes and formal written retainers must be drafted with considerable care in order to reflect the client’s specific instructions. It may well be that with further passage of time, tried and tested formulas will be devised and used routinely by practitioners providing such a limited retainer service. In the present case the defendant, as identified by Jackson LJ, did not observe best practice having failed to set out with precision the limits of the retainer in the client care letter. Notwithstanding that error, I too am entirely satisfied that the defendant was acting under a limited retainer and carried out the work which the claimant had instructed her to undertake.

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