The Court of Appeal decision in Sharon Minkin v Lesley Landsberg t/a Barnet Family Law (“BFL”) [2015] EWCA Civ 1152 provides law firms with welcome clarity on the extent of their obligations in unbundled services (limited retainer) cases.

The court held that:

• the retainer was limited solely to the issues on which BFL had advised;
• the advice insofar as provided had been correct;
• the law firm was not under a duty to advise more widely than it had done.

The appeal argument

The case concerned Mrs Minkin who, having agreed terms of financial settlement in divorce proceedings directly with her former husband, instructed BFL to draft a formal Consent Order for approval by the Court.   Notwithstanding the limited nature of the instruction, and the limited fees being charged, she contended, in her appeal action that: (i) the retainer was not limited; and (ii) BFL was under a duty to provide broader advice over and above that which was set out in the retainer letter (and had failed to do so).

The judgment

King LJ reflected on the value of unbundled services to both litigants in person and the courts. and highlighted the:

"very serious consequences for both the courts and litigants in person generally, if solicitors were put in a position that they felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise of a document (albeit complex to a lay person) may lead to them having imposed upon them a far broader duty of care requiring them to consider, and take it upon themselves to advise on aspects of the case far beyond that to which they believe themselves to have been instructed"

Ongoing risks to be alert to

You must ensure that the limited extent of the retainer is absolutely clear and unambiguous.  Not only in the retainer letter(s) but any other client-facing documentation.

King LJ essentially accepted that there are not currently any widely-accepted tried and tested formulas regarding retainer letters and the effective limitation of liability in the provision of unbundled advice.  This is likely to mean that firms spend more time and money on the engagement process for work that already has slim profit margins.

In the event of any dispute, protracted litigation (as in this case) remains likely unless and until there is a substantial body of judicial authority to make such litigation unnecessary, which is unlikely to be the case for some time to come.

Regardless of the value of the work you are undertaking, as a solicitor you cannot limit your liability at anything less than the compulsory minimum professional indemnity insurance (namely £2 million for unincorporated partnerships or £3 million for limited liability partnerships or limited companies).  This could leave you with a larger risk exposure than the work merits.  (For more information of limitation of liability, look out for our upcoming article on the topic).

To discuss any concerns you may have regarding your own approach to offering unbundled services, contact your Lockton broker, or our risk manager, Calum MacLean.