Who needs a lawyer, anyway? Limited retainers, financial remedies and drafting consent orders
4th December 2015
Minkin v Landsberg  EWCA Civ 1152
Drafting a consent order: How hard can it be?
- What is the extent of a solicitor’s duty to advise ‘in circumstances where the parties [have] reached agreement and solicitors [are] being asked to put that agreement into proper form for approval by the court’ (para )?
- Will a limited retainer – limited to drafting a Form E, or to drawing up a consent order, but not advising as to merits – protect a solicitor from a subsequent negligence claim?
- Is it the job of the court to re-draft consent orders handed up by unrepresented parties, to ensure that every angle and future eventuality has been considered?
- Will a court ‘rubber-stamp’ an agreement?
In Minkin v Landsberg  EWCA Civ 1152 Jackson LJ dismissed an appeal from a decision of DJ Jackson (!) that Ms Landsberg, a solicitor on a limited retainer, had no duty of care to her client.
The judgment is useful in that King LJ, with Tomlinson LJ concurring, adds some important observations about best practice for solicitors (and by analogy, it is submitted, for Direct Public Access barristers) in financial remedy / ancillary relief proceedings, and accurately documents the predicament of first instance judges caused by the increase in lawyerless litigation.
In the analysis at the end of this article, I offer some tips for practitioners, and some tips for would-be parties to financial remedy / ancillary relief litigation.
Background to the claim – the order by consent
Mrs M (the Claimant Wife, ‘W’) and Mr M (her erstwhile husband, ‘H’, not a party) had separated in 2007 after a 16-year marriage. The assets were a house in Hertfordshire, a Spanish flat and H’s financial advice business. Early in 2009, W and H had reached an agreement concerning their matrimonial finances. This was set out in a home-made document headed ‘Minutes of Agreement to Consent to an Order’. W was to receive 2/3 of the proceeds of sale of the house (after various debts had been discharged), H would have the Spanish flat, H would pay to W spousal maintenance of £300 per month, and child maintenance of £800 per month.
Shortly thereafter, W had second thoughts. She consulted a firm of solicitors – TT – who stated that further disclosure would be necessary in order to back up their advice to W that the deal did not seem to be satisfactory.
TT also wrote to H’s solicitors in Feb 2009, copying in W, expressing W’s concern that she signed the order under duress, that H was bullying her, and stating that her consent was withdrawn.
H and W nonetheless presented a consent order to the court on 4 March 2009. The court rejected it, due to lack of specificity as to repayment of H’s debts. The approval hearing was adjourned to 7 April 2009. In the meantime W was referred to Ms Landsberg, a solicitor (D), by the Jewish Women’s Refuge. D assisted W under the Legal Help Scheme (a limited legal aid scheme then in operation).
On 9 March 2009 D wrote to W confirming W’s instructions, suggesting certain amendments to the current draft of the consent order, and setting out her advice on the basis of the information then presented to her. Following this, W wrote to D, confirming that D had correctly understood her instructions, acknowledging certain risks as to enforcement of maintenance if H were to live abroad, but stating that nonetheless she sought a swift resolution.
In late March 2009 the draft consent order as agreed between D and H’s solicitors was filed at court. TT had ceased acting for W, and by 6 April 2009 its file had arrived at D’s offices. On 7 April 2009, H and W attended the county court without solicitors, and the court approved the settlement and made a formal order in those terms.
‘Endless problems arose’ thereafter (para ), leading to further litigation between W and H, with various costs orders being made against W. W blamed D for her advice – or lack of it – and thereafter sued D for negligence.
Negligence claim at first instance
The negligence claim was tried by DJ Jackson on 4 November 2014 over 4 days. D argued that the scope of her retainer was strictly limited.
In her judgment, summarised at para , DJ Jackson found that the retainer was ‘a limited retainer, namely to embody the matters agreed…in a consent order which the court would approve’. W, an intelligent woman, ‘who knew her own mind and understood the legal issues’ had not told D that her agreement had been under duress, or that she wished to resile from it. D had ‘handled the litigation after March 2009 competently’, ‘was not responsible for the costs orders’ and ‘was not under a duty to advise on the merits of the agreement reached’. Even had C been negligent, the claim would fail as the damages were speculative.
The appeal to the Court of Appeal
W was aggrieved, and so appealed. W asserted that D’s retainer was not limited to the extent held by DJ Jackson, and that D had been under a duty to give broader advice.
The court distilled the principles pertaining to solicitor negligence from:
- Midland Bank Trust Co Limited v Hett, Stubbs and Kemp (a firm)  1 Ch 384 (at 402 – 403) (relation between implied duty of care and terms / limits of retainer);
- Carradine Properties Limited v DJ Freeman & Co [1955-1995] PNLR 12, at 12 – 13 (effect of experience of the client on the solicitor’s duty);
- Hurlingham Estates Limited v Wilde & Partners  1 Lloyd’s Law Reports 525, at 526 (nature of any limitation by agreement of scope of solicitor’s duty: although the court inMinkin would have been ‘more cautious’ than Lightman J here (para ));
- National Home Loans Corporation PLC v Giffen Couch & Archer  1 WLR 207 (limited retainer with an experienced client confined the solicitor’s duty of care);
- Credit Lyonnais SA v Russell Jones & Walker (a firm)  EWHC 1310 (Ch);  All ER (D), at para  (duty to inform client of potential risks a solicitor learns of as a result of, and in course of carrying out, express instructions);
- White v Jones  2 AC 207 (obligations in certain circumstances to third party beneficiaries).
Jackson LJ set these out at para :
- ‘A solicitor’s contractual duty is to carry out the tasks which the client has instructed and the solicitor has agreed to undertake.
- It is implicit in the solicitor’s retainer that he/she will proffer advice which is reasonably incidental to the work that he/she is carrying out.
- In determining what advice is reasonably incidental, it is necessary to have regard to all the circumstances of the case, including the character and experience of the client.
- In relation to (3), it is not possible to give definitive guidance, but one can give fairly bland illustrations. An experienced businessman will not wish to pay for being told that which he/she already knows. An impoverished client will not wish to pay for advice which he/she cannot afford. An inexperienced client will expect to be warned of risks which are (or should be) apparent to the solicitor but not to the client.
- The solicitor and client may, by agreement, limit the duties which would otherwise form part of the solicitor’s retainer. As a matter of good practice the solicitor should confirm such agreement in writing. If the solicitor does not do so, the court may not accept that any such restriction was agreed.’
Application to the facts
It was ‘contrary to good practice’ that D had not confirmed the limited nature of her retainer by W in writing (paras , ), but the Court of Appeal could not go behind the lower court’s having found this as a fact (para ).
Dismissal of appeal – no duty
Nonetheless, D was acting under a ‘defined and limited retainer’ (para ):
D did not have a duty to warn W that:
- She was not advising W as to the merits;
- The agreement may be unfair;
- There had been no investigation of H’s means and assets.
All of those matters ‘were obvious to the claimant’, ‘an articulate and intelligent client, who knew her own mind’, and was ‘well versed in the litigation’ (paras  and ). W had already taken advice about the proposed order. She had sought a swift conclusion, and she had rejected D’s warning as to potential enforcement problems.
D had no duty to investigate the question of duress, this having not been mentioned to D by W, W also not having shown to D the letter from February 2009 in which it had been alleged (para ).
D had no duty to read the incoming file from TT on the day it was received (para ).
It was common ground on appeal that DJ Jackson had made no decision on causation (para ).
This would not be remitted to the trial judge, because W could not succeed:
- W had ignored all the warnings from her first solicitor, TT; and
- The oral evidence was not such that the judge could have found that W would have acted differently if given the warnings once again by D.
Quantum of damages
D’s counsel suggested that W had suffered no loss, the description by DJ Jackson of W’s quantification of damages as ‘speculative’ being ‘the right result by the wrong route’. Had it been necessary for the court to decide quantum, then the case would have been remitted to the County Court, ‘in the circumstances, however, the damages issue does not arise’ (para ).
King LJ reminded practitioners that the ‘court…is not a rubber stamp’ (para ). Despite having a ‘heavy influence’, ‘an agreement in a financial remedy case cannot oust the jurisdiction of the court’ (para ), the Supreme Court in Sharland v Sharland  UKSC 60 having emphasised this at paras  and ).
How hard can it be to draft a consent order?
As King LJ reminded litigants: ‘the answer is ‘Very Hard’ (para ). The order is a ‘complex legal document which must deal with all aspects of the parties’ financial lives now and for the future’.
Such complexities include:
- The technicalities and the form for any pension sharing;
- The precision required in a property adjustment order concerning deductions, CGT, back-up plans, liabilities to mortgagees and indemnities;
- Termed spousal maintenance and extendability of orders / s 28(1A) bars;
- The exclusion or otherwise of Inheritance (Provision for Family and Dependants) Act 1975 claims.
Unrepresented parties and the new era of financial remedies
‘District Judges, more than any other level of the judiciary, are finding their lists are overwhelmed as a consequence of the increase in court time taken by each case where (as is now routinely the case) the parties appear as litigants in person.’
King LJ considered the following scenarios:
- A fully contested financial remedy hearing with unrepresented parties: the District Judge will draft an order with ‘no scope for ambiguity or misunderstanding’ (para );
- Both unrepresented parties appearing before the court inviting it to make an order by consent:
‘The district judge has neither the time, nor should he or she attempt, to interpret the minutiae of the agreement and draft/redraft the proposed consent order. That is not to say that he will not correct obvious errors and technical defects, but his task is to approve the order, not to sit with the parties and painstakingly work through with them every possible parameter of the draft in order to ensure they have considered every angle and future eventuality; to do so runs the risk that the judge will be seen to be giving advice or is seeking to interfere or undermine an otherwise unimpeachable agreement reached between the parties.’ (para )
Consequences for legal practitioners
- D was fortunate, in circumstances where she had not set out the limitation to her retainer, to have persuaded the lower court to find as a fact that the retainer was indeed limited. Not every solicitor will be able to persuade a court on this front, and therefore, as King LJ observed: ‘supporting client care letters, attendance notes and formal written retainers must be drafted with considerable care in order to reflect the client’s specific instructions’ (para ).
- Undoubtedly insurance premiums for practitioners who advise in matrimonial finance claims will remain stable (or even possibly reduce) as a result of this very clear guidance from the Court of Appeal.
- What King LJ describes as ‘bespoke’ or ‘unpacked services’ (retainers limited to, eg completing Form E or drawing up consent orders (and perhaps the drafting of questionnaires) – ie help with the difficult bits of litigation) are ‘invaluable to both courts and litigants alike’ (para ). This judgment ensures that those firms (and by analogy those Direct Public Access barristers) will not be dissuaded from assisting in this limited fashion.
- King LJ is perhaps slightly over-optimistic in asserting that an unassisted District Judge will be able to make an order ‘with no scope for ambiguity or misunderstanding’:
- What if an order is made which directs one party to indemnify another as to debts or as to mortgage liability – a potential jurisdictional hot potato which has attracted extra-judicial comment from Mostyn J at para  of the Report of the Financial Remedies Working Groupdated 31 June 2014 and indeed from solicitor David Hodson, here?
- What if a property adjustment order is made with no ‘back-up arrangements’ (as King LJ feared at para )? Of course, paras  and  of the decision of HHJ Platt in W v W  1 FLR 92 offer some reassurance – that the court can ‘work out’ an order, but it would of course be preferable for the order to be correctly drafted in the first place.
- What if a Mesher order or a Trust of Land set up by a financial order is ambiguous or otherwise incapable of being brought into effect?
- What if an order is made purporting to compel a third party to make a payment to one of the parties?
- The matters referred to above and at para  of the judgement in Minkin are just some of the difficulties thrown up in the complexities of drafting financial remedy orders. They underline the importance of court hearings being attended by lawyers, and of the dangers presented to the courts and to parties by litigants acting in person.
- If only there were central funding available to help those of limited means secure legal representation…
Considerations for divorcing couples
- W left her marriage feeling aggrieved not only about the settlement itself but also about her experience of the legal system. Some may say that she was at least in part the author of her own misfortune in that she did not heed the advice of TT, and apparently did not seek the advice of D.
- If you are about to embark on financial remedy negotiations with your soon-to-be-ex husband / wife or civil partner, it makes sense to obtain early legal advice. This would apply whether or not your chosen route is one of mediation (leading hopefully to an agreement), arbitration or litigation.
- Divorcing parties must ensure that they are equipped with knowledge of what thepossibilities are in any litigation so that they can investigate fully the best solution for their particular circumstances.
- Where a case has an international dimension (eg a forthcoming emigration or a property abroad), there are likely going to be considerations about enforcement of any orders, and hence it is all the more important to take legal advice, particularly early on.
- If you have fears that your partner may be hiding assets, or dissipating assets, then there are steps which can be taken to prevent this (eg freezing orders), and a lawyer can advise as to what these may be.
- If you have nearly reached an agreement – make sure that you not only check that it is correctly-worded (not to mention enforceable and unambiguous), but that it has been based upon full, frank and clear financial disclosure. A solicitor or a barrister will be able to help you ask questions of your ex-partner, and ensure that you have not been asked to reach an agreement in circumstances of material non-disclosure, duress or even fraud.
- Remember, that assistance can be sought – and under a limited retainer – with respect to the filling-in of court forms from either a solicitor or a barrister. In particular the completion of Form E is not a straightforward task, and many solicitors and barristers will be able to guide you if you are finding it confusing.
- Advice need not be from a solicitor: it could be straight from a barrister under the Bar’s Direct Public Access scheme. The directory of Direct Public Access barristers, setting out their expertise and geographical reach may be found here.
- If using a solicitor, you would be well-advised to ensure that you use a solicitor who is a member of Resolution.
This was first published by Family Law on 4th December 2015.