Once more into the breach

Date:

11/03/2010

Author:

Richard Buxton

Source:

Law Society Gazette

Matter:

Mills-Owens - solicitors costs on statutory appeal

File:

As the solicitors in Buxton v. Mills-Owens [2010] EWCA Civ 122 who stood to lose all profit costs, the Court of Appeal's decision that we terminated our retainer with our erstwhile client Mr Mills-Owens with good reason was a relief. We had been instructed to put points to the Court which were in an administrative law context unarguable, and we and counsel had declined to do so. It was, however, hardly a surprise, as the decisions to the effect that it was not good enough reason to break a retainer to decline to do something one considered improper that we appealed struck one as unlikely to survive in the Court of Appeal.

Happily the Law Society thought so too, and we are grateful for it supporting our case on that.

However, the more interesting stone that did not get turned related to the underlying nature of the solicitor-client relationship. The Court of Appeal affirmed, but without analysis of the background to the rule, that a solicitor's retainer is an "entire contract". Conventionally that means payment only on completion of the job, like the seaman in Cutter v Powell, (1795) 6 Term Reports 320, who died en route and thus failed to complete his agreed voyage. His widow failed to claim for any of his wages. This harsh rule has been ameliorated over the years - but apparently not in the case of solicitors who wrongly break retainers.

We said "entire contract" is a label to a committed and continuing relationship between solicitor and client, but not one where breach should mean the loss of all profit costs. We said the circumstances were like Taylor v Laird (1856) 1 H&N 266, where a captain employed to explore and trade on the River Niger had refused to go further than a particular trading post, but succeeded in claiming his fees on the basis that these were payable on a monthly basis. And similarly, we argued that our fees accrued as we spent time, as is normal with litigation retainers. Embarking on High Court litigation indeed bears close parallels in other ways with the hazards of exploring Africa in the 19th century.

The reaffirmation of the concept of "entire contract" without considering the serious problems that this gives rise to is unfortunate. The Court had an excellent opportunity to do so. There has been judicial criticism of the "entire contract" rule from the 1870s onwards, most recently by Lindsay J in Angelo Perotti v Collyer Bristow [2003] EWHC 25 (Ch).

From a solicitor's point of view "entire contract" is a Sword of Damocles, such that if one does err in breaking a retainer, - one's reason was not good enough - one is entitled to no costs at all. This leaves solicitors in the unsatisfactory position of having to "follow instructions" against their better instincts for fear of the sword falling.

While sympathising with our concerns, the Law Society did not consider the entire contract point needed resolving, as it could be dealt with terms of business. In the light of the Court of Appeal judgment we will take (yet another) look at our terms of business to ensure that there is no prospect of their being construed as an entire contract and in the event of breach, damages are limited to losses suffered. But even then, situations may arise - for example starting very urgent work for someone without the opportunity to sign terms of business - where this is not practicable. Indeed it is just such situations which can land one with a difficult client or circumstances which were not as first appeared.

The entire contract rule and prospective loss of all profit costs in case of wrongful breach of a retainer is not covered at all in the Solicitors Code of Conduct and one trusts that the Law Society may consider releasing a practice note to help solicitors avoid the trap into which we fell, and from which we had to extricate ourselves by pursuing two levels of appeal from the Costs Judge.

Richard Buxton

Richard Buxton heads his small firm in Cambridge specialising in environmental and public law