The Facts

The claimant acted as a solicitor for the defendants under a CFA. Shortly before trial the defendants disinstructed the claimant and settled their action on a “drop hands” basis.   The settlement effectively deprived the claimant of its costs and the claimant alleged that the defendants were under a duty to the claimant (as their solicitor) to act in their solicitor’s best interests and only act good faith, but that the defendants had breached this implied term.   

The Issue

The claimant was retained under a CFA. Was it an implied term of the litigation retainer that a client must act in the solicitor’s best interests and only act in good faith?

Held

Paragraph 84 the Judgement held that a retainer between a solicitor and client is not subject to a duty of good faith and that such a duty is not necessary for the relationship between a solicitor and its client to be workable. A solicitor of course owes a fiduciary duty to its client. The claimant argued that its relationship with the defendants was a contract giving rise to a duty of good faith as outlined in Bates v Post Office [2019] EWHC 606 (QB). However, there is no authority to support the argument that a client owes his solicitor a duty of good faith. Indeed the solicitor's fiduciary duty to the client would displace such a finding under Bates v Post Office. The presence of a CFA did not change that, and the claimant's case had no real prospect of success on these implied terms.

Comments

This is important in cases where a solicitor is acting in litigation, but is misled by its client.  Solicitors should carefully consider whether their CFA or Terms and Conditions need to be amended to include express obligations by their client to act honestly, openly and in good faith in relation to any litigation being conducted.

https://www.bailii.org/ew/cases/EWHC/Comm/2021/3409.html

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