Solicitor negligence and the exercise of liens: David Ellis v John Hodge Solicitors (a firm)

8 November 2022

A lien refers to a solicitor’s right to retain their client’s property, including any paperwork and documents held by the solicitor, until the firm’s fees are fully paid.

However, in the context of a claim for professional negligence against a law firm, it would seem entirely contrary to all equitable principles for that firm to be able to exercise this right as a way of overcoming any obligation to disclose a file to a former client. Indeed, in the recent case of David Ellis v John Hodge Solicitors (a firm) [2022] EWHC 2284 (Comm), the High Court held that a law firm being sued for negligence cannot use its’ lien over a file for unpaid fees to restrict disclosure.

The facts of the case

On the facts of Ellis, law firm John Hodge Solicitors (JHS) had acted for Mr Ellis in the context of a personal injury claim. Having rejected several offers, the highest being in the sum of £200,000 (in a claim in which Mr Ellis sought to recover a figure in excess of £500,000), an award of damages was assessed by the court in favour of the Claimant, albeit only in the sum of £11,813.63.

Mr Ellis sued JHS for negligence, alleging that it had failed properly to advise him as to the effect of the offers made by the Defendant in the underlying claim and, in particular, the risk that the Defendant’s expert evidence would be preferred to that of the Claimant.

The Defendant firm denied the allegations against them and counter-claimed for its unpaid fees, arguing that the Claimant had been fully advised of the litigation risks. The Defendant also refused to provide initial disclosure of the file to the underlying claim although, before the court, an offer was made to disclose the file to the Claimant’s solicitors, subject to an undertaking that the file would not be further disclosed to Mr Ellis and returned once considered.

It was asserted by the Defendant firm that this would allow the solicitors to read and take instructions on the file, and to use any relevant material, whilst preserving at least some of the value of the lien by preventing the Claimant himself from having sight and control of the file. It was common ground between the parties that the file was both highly relevant ‘and’ disclosable, where the court was asked to decide whether the lien could restrict the extent of this disclosure.

The findings of the court

HHJ Pearce accepted that whilst the court has the “undoubted power” to modify disclosure obligations that would otherwise arise under the Civil Procedure Rules (CPR) where the party from whom disclosure is sought has a valid lien over a file for unpaid fees, he declined to exercise this power in favour of JHS. It was said that: “On the face of it, the Claimant has an arguable case that can only be understood by consideration of the documents”, where only allowing the Claimant’s solicitors to see the file, provided they undertook not to share it with their client, was insufficient.

The file was clearly central to the issues, such that the Claimant could not fairly conduct the claim without knowing the contents and, if told the content, the lien would lose its value just as much as if he saw the documents. The Defendant’s counterclaim for unpaid fees also put the contents of the file directly in issue, where inspection of that file was central to determining liability for those fees, making it difficult to see how the case could be properly tried without the file being fully disclosed.

As such, the court disagreed that the lien over the file because of unpaid fees meant that disclosure of the file should be restricted to the solicitors acting for the Claimant in the negligence proceedings. JHS were therefore ordered to disclose their file for the personal injury litigation, without any requirement for the Claimant's solicitors to provide an undertaking “restricting the use to which the file is put beyond the restrictions that are contained in the CPR in any event”.

The key considerations

This decision is unique in the sense that there has not been any reported authority on the exercise of a solicitor's lien in the same context, ie; where a law firm client sought disclosure of documents for a dispute other than that in which the file had been created. In all previous authorities, the litigation in which the lien was being asserted by solicitors was either for the same or related litigation.

For example, in the High Court decision of Higgins and Others v TLT LLP [2017] EWHC 3868 (Ch) in which I acted for the Claimants, an order was made in their favour for delivery up of documents in the possession or control of their former solicitors in the context of a professional negligence claim against tax advisers. In this case, where the Claimant had terminated the retainer following misconduct on the part of their former solicitors, the court was able to make an order overriding what would otherwise be the effect of a solicitor's lien.

However, whilst the decision in Ellis may provide some authority when a court is being invited to interfere with the exercise of the lien in a negligence claim against former solicitors, it is also potentially distinguishable on its facts — both by reason of the retainer being terminated on mutual consent ‘and’ the fact of a counterclaim for unpaid fees, described by HHJ Pearce as “significant”.

Legal disclaimer

The matters contained within this article are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions.

Before acting on any of the information contained herein, expert advice should always be sought.

© Melissa Worth, November 2022

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