Retainer: a contract
A solicitor’s retainer (agreement with a client to act for him/her) is based on contract law: a solicitor is instructed to act by a client in ‘a relevant legal context’ (a term used by Taylor LJ in the context of his definition of legal professional privilege in Balabel v Air India  Ch 317, CA) and for a consideration (mostly payment of agreed costs: explained further below). This note discusses the question of inception of a retainer contract: that is the time from which a solicitor is bound in contract law terms and, as a result, the solicitor’s professional indemnity insurance is on risk.
The moment a lawyer gives legal advice (ie not information about train times or advice as to what a client should wear if it rains on the way home from court) his/her, or the firm’s, insurers are on risk. This is the point of commencement of retainer (‘PCR’). And the PCR will be confirmed by the client deciding to follow up on the advice. A client’s right to claim advice privilege runs also from the PCR date.
Professional indemnity insurance
From the PCR, a client is entitled to expect to be able to rely on the lawyer’s duty of care towards him/her. In default by a solicitor, a client may sue; and s/hecan expect to be indemnified by the solicitor’s professional indemnity insurance policy (PIIP).
For example: a solicitor is at court and agrees with an individual to advise outside court, or is asked by the court to assist an unrepresented client? From the moment advice is given the PCR has passed; and the lawyer’s PIIP is on risk. That the policy is on risk is not because a lawyer has carried out all the POCA and other file-opening tests which SRA and other practice rules may require; or (say) because his/her firm’s file opening manual dictates certain steps; or a client care letter is sent out; or because the firm wants to decide on whether it will make money out of the case. No: it is because if (1) the client alters his/her position (even in the slightest way) (2) as a result of the advice given, and (3) that position is worsened because the solicitor’s advice is negligent, then damages may follow.
And what of the three defining premises for a contract? These operate in the retainer context as follows:
- Intention to create legal relations The client may not realise it, but the act of seeking advice evinces an intention in him/her to create legal relations;
- There is offer and acceptance: (a) the request for advice, (b) the offer of advice and (c) the accepting of that advice by listening and altering (albeit only fractionally) an individual’s position based on that advice; and
- Consideration: an implied term of the above is that the lawyer can charge: in consideration of my giving advice to an individual I may render a bill (that I chose not to do so, does not lessen the fact of my right so to do: consideration passes whether I charge or not).
It follows that at the point where a solicitor starts to advise (the PCR), a contract of retainer is born and the potential for professional negligence (however slight) arises. The professional indemnity insurer is on risk and the PIIP provides cover.
Solicitor’s breach of contract of retainer
A retainer contract engages contract law. Its consequences echo mostly in tort (and may involve questions of professional practice and the SRA Code (http://www.sra.org.uk/solicitors/handbook/code/content.page). Damages are amongst the remedies for both.
A client may terminate a retainer at will. The solicitor can only terminate for cause (SRA Code Ch 1 IB(1.26); and see eg Buxton v Mills-Owens  EWCA Civ 122; circumstances in which a retainer may be legitimately terminated are summarised in my Practice of Family Law (Jordans (2012) chapter 4).
Where a solicitor deliberately terminates a retainer, and the client – knowing no better – goes along with it; or the solicitor constructively determines it, then damages in contract arise. For example, where an employed lawyer (‘A’) gives advice in court or provides a person of limited means advice in the pub, then a contract will be formed. The PIIP insurer is on risk. The firm or its board of directors (to provide a modern corporate framework) may not want the client. It may refuse to issue a file. But, it thereby repudiates the contract and the person advised can sue for that breach.
Thus, say, a firm (‘CLF’) agrees with solicitor A, a consultant with the firm, that they will take on clients who come with him from a previous employment. CLF, on reflection, do not like the commercial ‘prospect’ of certain cases and refuse to act; and they sack A before the CLF file opening procedures are complete. A is the agent for his/her clients. His contract on their individual behalves is repudiated by CLF. In consequence the clients must act in person, till such time as A finds another job and a firm who will take on those clients; or that is what CLF – wrongly – think.
While this is going on a court time limit (say) is missed (court processes do not stop while lawyers squabble amongst themselves or with their regulators); or a court hearing is attended only the client acting in person. The PCR has long passed. The client suffers actionable loss; and CLF’s PIIP insurers are on risk.