Butler -v- Bankside Commercial Ltd : Solicitors entitled to terminate CFA and recover fees where client rejects advice to make a settlement offer

Advice The perils of rejecting advice

In a decision yesterday that is of importance to all clients represented by way of a Conditional Fee Agreement, the High Court has found that in circumstances where the client refused advice to make an offer of settlement, the solicitors were entitled to terminate the retainer and deliver a bill.

The Conditional Fee Agreement incorporated the Standard Law Society Conditions which provided, at clause 7 :

    What happens when this agreement ends before your claim for damages ends?
    "(b) Paying us if we end this agreement
    …(iii) We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:
    • Pay the basic charges and our disbursements, including barrister's fees;
    • Pay the success fee if you go on to win your claim for damages.

21. Where there is no CFA, the client's privilege of ignoring her solicitors' advice, so long as they can continue to act within the boundaries of their professional duties, is preserved intact.

22. Where, however, there is a CFA under which the solicitors, themselves, face significant economic risks in the event of an adverse result at trial, one would not expect the level of protection which they are afforded against the whims of the unreasonably optimistic client to turn upon the random happenstance of whether or not the other side has made an approach which can be categorised as a contractual offer capable of acceptance. For such solicitors to be required to wait, like Vladimir and Estragon, for an offer from the other side which might never come rather than, where appropriate, to take the initiative in negotiations would impose artificial and unjustifiable limits on their ability to protect their own legitimate interests.

The Hon.Mr Justice Turner

​That does not, however, leave the door open to an unscrupulous solicitor to withdraw and seek payment in all circumstances where the client rejects the advice to consider settlement. The client in this case expressed a concern that a solicitor may wilfully undersell their client's in order to serve their own financial interests in costs.

There may, of course, be cases in which a genuine issue will arise as to whether, as a matter of construction, a solicitor's opinion falls within the scope of clause 7(b)(iii) and each such case must be decided on its own facts. There may also be cases in which, for example, the timing of the opinion and/or the particular circumstances in which it was communicated to the client may open the door to an argument that the solicitors were thus in breach of an implied term the scope of which precludes them from relying upon their opinion to trigger the operation of clause 7(b)(iii).

The Hon.Mr Justice Turner​, para 28
File Name: Butler-v-Bankside-Commercial-Ltd-2019-EWHC-510-QB-07-March-2019
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