Solicitors’ misconduct and the right to exercise a lien

Close up of business documents stack on desk report papers stack
29 November 2017

The High Court has considered when it is appropriate for a firm of solicitors to maintain a lien over its former clients’ papers in circumstances where the clients terminated the retainer.  In the case of Higgins and others v TLT LLP, heard on 27 November 2017 before Mr Justice Barling at Manchester High Court, the claimants were awarded an order for delivery up against their former solicitors.  The case will be of interest to solicitors, insurers involved in the solicitors’ indemnity market and clients wishing to challenge their (former) solicitors’ lien.

Background

 The claimants issued a Part 8 Claim, seeking an order for delivery up of the claimants’ papers being held by their former solicitors, TLT LLP.  The former solicitors had been retained by the claimants to bring a claim for substantial damages for professional negligence against a firm of accountants and financial advisers.  The claim form was issued by the former solicitors, but the former solicitors negligently failed to serve the claim form in time.

The former solicitors, on behalf of the claimants, had issued an application for, amongst other things, relief from sanctions to try and rescue the claim form.  This application was the subject of the widely reported judgment of HHJ Pelling QC dated 19 September 2017At paragraph 39 of his judgment, HHJ Pelling QC held that the failure to serve was “the result of incompetent or negligent error” and the claim form was struck out.

 After HHJ Pelling QC’s judgment was handed down, the former solicitors advised the claimants to seek independent legal advice and the claimants instructed Knights1759 to advise on the former solicitors’ failure to serve the claim form and to consider whether the claim against the firm of accountants and financial advisers may be advanced notwithstanding the former solicitors’ error.

The claimants requested release of their file of papers from their former solicitors, but the request was refused.  The former solicitors claimed that they were entitled to exercise a lien for their fees and expenses.

The Key Legal Considerations

The relevant law on liens is summarised in Halsbury’s Laws of England, Vol 65 at paragraph 775 which provides (inter alia) that, “In the event of a change of solicitors in the course of an action, the former solicitor’s retaining lien is not taken away but his rights in respect of it may be modified according to whether he discharges himself or is discharged by the client.  If he is discharged by the client otherwise than for misconduct he cannot, so long as his costs are unpaid, be compelled to produce or hand over the papers even in a divorce case.”

The key issue was whether “misconduct” meant professional misconduct or whether the former solicitors’ negligence was sufficient to amount to misconduct.

The court considered the case of Re A Solicitor [1972] 1 WLR and the judgment of Lord Denning which, it was argued, supported the contention that “mere negligence” does not amount to misconduct.  However, Mr Justice Barling held that the claimants’ case could be distinguished from that authority because the former solicitors’ negligent error, in failing to serve the claim form, was a grossly negligent error.  It is perhaps worthy of note that in his judgment in September HHJ Pelling QC stated that, “The breaches that occurred in this case are not trivial. Cs' solicitors failed to take the most basic step required in civil litigation which was to serve the Claim Form on defendants within the jurisdiction of the court in accordance with the straight forward code for service set out in Part 6 of the Civil Procedure Rules.”

The court found for the claimants and held that the negligent error of failing to serve the claim form did amount to misconduct.  As the former solicitors’ retainer was terminated for misconduct, the court ordered that there was no basis upon which to maintain the lien and that the requested papers must be released. The former solicitors were ordered to pay the claimants’ costs of the application.

Comment

It is unusual for a firm of solicitors to maintain a lien over their former clients’ papers when serious allegations of negligence have been alleged.   This case is particularly unusual because the allegations of breach of duty against the former solicitors would appear to be unanswerable.  The judge emphasised that disclosure of the papers would have been in all the parties’ interests so that the dispute could be properly investigated and resolved without unnecessary costs being incurred.

The Dispute Adviser

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