Unbundling: The benefits and the burdens
The terms ‘unbundling’ and ‘a la carte’ are still relatively new in the context of legal services. Both have been used to describe the provision of discrete acts of legal assistance under a limited, rather than a full, retainer. For some, unbundling represents a fresh opportunity to broaden access to justice, particularly for those clients of modest means who would previously have been eligible for legal aid. As ever though, with new approaches come new and potentially unforeseen risks.
In the recent case of Sharon Minkin v Lesley Landberg[1], the Court of Appeal considered the nature and scope of a solicitor's duty when acting under a limited retainer. Although this was in the context of matrimonial proceedings, the decision has wider implications and, happily, offers some comfort to those inclined to provide unbundled services.
Background
The claimant was a chartered accountant working in her husband’s financial management business. In 2009 and having decided to divorce, the couple reached agreement on assets and future financial arrangements, recorded in “Minutes of Agreement to Consent to an Order” (the Agreement). However, 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 to address this.
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 Agreement to Barnet County Court for approval. The court refused, requesting that further details of the husband's debts be included within it.
The claimant then approached the defendant to rectify the deficiencies in the Agreement, 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 Agreement, including risks around enforceability in relation to the husband's intention to move to the USA. The claimant acknowledged these risks, but indicated that she simply wanted the matter to be concluded “as swiftly as possible”.
The defendant included all of the agreed settlement terms within a draft consent order, which was then approved by the court. However, the claimant later decided that these terms were not to her advantage and litigation ensued between the couple.
The claimant subsequently brought proceedings against the defendant, claiming that she had not provided adequate advice on the consent order and that had she been properly advised, the claimant would not have agreed the terms of the order but would have achieved a more favourable settlement. In response, the defendant argued that she had simply been instructed to finalise an agreement which had already been reached and upon which the claimant had been legally advised.
At first instance, the Deputy District Judge dismissed the claim on the basis that:
- 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 Tilley and had decided to proceed with it 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 Tilley’s file before the consent order was approved by the court.
The appeal
On appeal the claimant alleged the Deputy District Judge had been wrong to find the defendant's retainer was limited, such that it did not give rise to a duty to advise on the merits of the Agreement and undertake investigations into the husband's means and assets.
In the leading judgment, which received unanimous approval, Jackson LJ summarised the relevant principles governing the extent of a solicitor's duty to advise as follows:
- A solicitor's contractual duty, and resulting scope of his/her duty in tort, is based on what the solicitor has been instructed to do and what he/she has agreed to undertake;
- The solicitor should advise on matters 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 it.
Taking these principles into account and dismissing the appeal, Jackson LJ concluded that the defendant’s duty of care in this case was limited and did not require her to advise and investigate further, as the claimant alleged. In doing so, he observed that the claimant:
- Must have known 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;
- Was a sophisticated individual, who understood finance and litigation and the complex issues at hand;
- Had already taken legal advice on the subject matter of the Agreement and the defendant knew this;
- Understood the Agreement and had decided to proceed despite advice to the contrary.
In addition, he concluded that even had the defendant been found to be in breach of her duty of care to the claimant, the claim would have failed on causation grounds as the claimant had not proved she would have acted differently had she received the advice from the defendant which she alleged she should have done.
Comments
Although fact sensitive, this decision will provide some reassurance for those solicitors offering unbundled services and those who have clients seeking to recoup losses suffered as a result of their own ill-considered decisions, by seeking damages from them and their professional indemnity insurers.However, it also highlights the risks in providing unbundled legal services.
In a profile piece for the Gazette and when asked about her thoughts on the case, the defendant said; ‘If this issue had not been settled it would have left solicitors up in the air. No one would take on just a single issue – and if they did the fees would have to be very high. If the case had gone the other way lawyers would have said: “That’s it, I’m not touching anything [on a limited retainer].” That’s what I would have said. …..I agreed for the judgment to be published as I felt it would have a wider interest for lawyers given that the issues raised in court were limited retainers and the comments of Lady Justice King about the inevitable effects of LASPO.'
For those intending to provide unbundled services and in the interests of good risk management, it may be prudent to consider such issues as:
· Whether such services are actually in the best interests of the client;
· The adequacy of the information on which to provide a particular legal service;
· The appropriateness of any existing standard terms of business;
· The need to record, with utmost clarity, those tasks not covered by the retainer;
· The risks, in practice, of inadvertently exceeding the bounds of any written retainer;
· The professional indemnity insurance implications, if any, preferably with a specialist broker.
Further guidance, on these and other relevant issues, can be found in the Law Society’s practice note ‘Unbundling civil legal services’. However, provided solicitors are alert to the risks of supplying unbundled services and pro-active in seeking to manage those risks, there seems no reason in principle why this new approach cannot deliver, for practitioners and clients alike, all of the benefits without any of the burdens.
Charlotte Houston Ian Peacock
Solicitor Partner
Professional Risks Professional Risks
Bond Dickinson Bond Dickinson
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[1] (Practising as Barnet Family Law) [2015] EWCA Civ 1152