DEFECTIVE RETAINERS (T11)

What is a defective retainer?

A retainer containing a problem with its formation, terms, statutory compliance or operation, potentially affecting enforceability or entitlement to fees. Example: A CFA does not cover the defendant against whom the claim succeeds.

What are the possible consequences of a defective retainer

The whole agreement may be unenforceable, a particular charge may be irrecoverable, or the agreement may be open to another remedy. The consequence depends on the defect.Example: A defective success-fee provision does not invariably invalidate every entitlement to basic fees.

How can the indemnity principle affect recovery under a defective retainer?

Generally, the receiving party cannot recover from the opponent costs which they have no enforceable liability to pay, subject to applicable exceptions.

Example: If the CFA creates no liability for the disputed work, the opponent can challenge recovery of those fees.

Does every regulatory breach automatically make a retainer unenforceable?

No. Distinguish regulatory non-compliance from contractual invalidity and statutory unenforceability.

Example: A failure to provide adequate information may have regulatory consequences without automatically extinguishing the whole fee entitlement.

What does SRA Code of Conduct paragraph 8.6 require?

Information must be given in a way the client can understand, enabling informed decisions about services, handling of the matter and available options.

Example: Explain a complicated funding arrangement in accessible language.

How can inadequate explanation undermine informed consent?

A client may not properly understand the financial obligations or choices they are accepting. This can support relevant contractual, equitable, statutory or regulatory challenges.

Example: The client signs without understanding that fees may be deducted from damages.

Does the client’s signature conclusively establish informed consent?

No. It is evidence of agreement, but does not necessarily establish that the explanation was adequate or that consent was properly obtained.

Example: Signing a dense document does not itself answer an allegation that a significant new liability was concealed.

What technical errors can cause problems in retainers?

Naming the wrong party, using an incorrect success-fee calculation, or omitting definitions essential to the agreement’s operation.

Example: The CFA refers to “success” without adequately identifying the event triggering payment.

What happened in Hailey v Assurance Mutuelle des Motards [2015]?

The CFA narrowly identified the rider as the defendant, but recovery was obtained against the insurer. The relevant success condition was not satisfied, preventing recovery of the solicitor’s fees under that wording.

Example: Check that the agreement covers the claim and parties actually pursued.

Does every incorrect defendant name invalidate a CFA?

No. The effect depends on construction, the surrounding circumstances and whether an appropriate remedy is available.

Example: An obvious misdescription may require different analysis from an agreement deliberately confined to one defendant.

What legislation governs the cancellation rights discussed in these notes?

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Their application depends on the client and how the contract was concluded.

Example: A qualifying consumer retainer concluded remotely may attract cancellation rights.

What is the normal cancellation period for a qualifying distance or off-premises services contract?

It ends 14 days after the day the contract is entered into, subject to the Regulations’ exceptions and extensions.

Example: The client may cancel during the applicable period without having to justify the decision.

Does every solicitor’s retainer have a statutory 14-day cancellation right?

No. The contract must fall within the relevant consumer rules; distance and off-premises classifications have specific requirements.

Example: Signing electronically does not, by itself, establish that every requirement for a distance contract is met.

What can happen if required cancellation information is omitted?

Under regulation 31, the cancellation period can be extended by up to 12 months beyond the normal period. Providing the information during the relevant period can trigger a further 14-day period.

Example: Omission does not simply mean that cancellation rights expire after the usual fortnight.

Can legal work begin during the cancellation period?

Subject to regulation 36, the consumer must expressly request early performance; an off-premises request must be on a durable medium. Payment on cancellation depends on compliance with the applicable conditions.

Example: Obtain the required request before beginning urgent work.

Does failure to explain cancellation rights automatically void the whole retainer?

No. Examine the specific statutory consequences, including extended cancellation rights and restrictions on charging for services supplied during the cancellation period.

Example: A solicitor may lose entitlement to payment for early work following cancellation without every contractual obligation having been void from the outset.

How can a change of firm create retainer problems?

Unclear transfer arrangements can leave disputes over authority, consent, continuity and payment rights.

Example: The client disputes ever agreeing that the incoming firm would act under the existing funding terms.

Does a client’s denial of receiving a transfer notice automatically defeat the retainer?

No. The court considers the documents, communications, conduct and legally necessary consent.

Example: Continued informed instructions to the incoming firm may be relevant evidence, although not conclusive in every case.

Why must the scope of work be clear?

Uncertainty can produce disputes about what the solicitor agreed to do and what the client must pay for.

Example: An engagement for advice on settlement may not extend to conducting an appeal.

Why must the charging structure be clear?

The client should understand how fees arise, how they are calculated and when they become payable.

Example: Explain whether a stated percentage is a CFA uplift on fees or a DBA percentage of recovery.

How can conflicts of interest affect a retainer?

Acting despite a prohibited conflict may breach professional and fiduciary duties and affect entitlement to remuneration or other remedies. It does not automatically produce the same consequence in every case.

Example: Two jointly represented clients develop opposing interests over settlement allocation.

Does client agreement always permit acting despite a conflict?

No. SRA paragraph 6.2 permits only limited client-conflict exceptions, with conditions including informed consent recorded in writing. An own-interest conflict is separately prohibited by paragraph 6.1.

Example: Consent alone cannot legitimise every conflicted instruction.

What is rectification?

A remedy correcting a document which, through mistake, fails to record the parties’ legally relevant prior agreement or common intention. It is not simply rewriting an unfavourable bargain.

Example: Correcting a printing error which recorded 30% when both parties had agreed 20%.

Must both parties currently agree before the court can rectify a document?

No. Rectification can be contested. The applicant must establish the applicable legal requirements and supporting evidence.

Example: Earlier correspondence may demonstrate the intended term even though the solicitor now disputes the correction.

How does variation differ from rectification?R

Rectification corrects the record of the original bargain; variation changes the bargain by agreement.

Example: Correcting a mistyped rate differs from mutually agreeing a new rate for future work.

Can a retainer be varied or replaced retrospectively?

In principle, yes, subject to statutory compliance, contractual requirements, proper consent and protection against undue influence. Retrospectivity does not guarantee recovery from the opponent.

Example: A correctly dated replacement agreement expressly covers earlier work.

Can retrospective variation automatically increase the opponent’s liability?

No. The solicitor–client agreement and the opponent’s costs liability are separate questions. Existing costs orders and applicable recovery rules may limit the effect.

Example: A later agreement creating a higher client liability does not necessarily impose that increase on the paying party.

How can a deed assist with a defective retainer?

A properly executed deed may create or confirm payment obligations without consideration, where legally permissible. It must satisfy the relevant formalities.

Example: The parties execute a deed recording agreed obligations for earlier services.

Does using a deed automatically cure every defect?

No. It cannot simply override statutory prohibitions, defective consent or other legal restrictions. Example: Executing a prohibited funding arrangement as a deed does not make it permissible.

Why can amending a retainer raise undue influence concerns?

The amendment may impose a liability the client previously lacked, while the solicitor occupies a position of trust. The circumstances and explanation must be examined.

Example: A client is asked during ongoing litigation to assume a substantial retrospective fee obligation.

What is actual undue influence?

Improper influence established through evidence that the client’s decision was procured by unacceptable pressure or manipulation.

Example: The solicitor exploits the client’s dependence to obtain agreement to a new liability.

What is presumed undue influence, and how does it differ from influence itself?

A solicitor–client relationship establishes influence without requiring proof of actual dependence. Undue influence is not automatically established: a transaction calling for explanation is also required, after which the evidential presumption can be rebutted.

Example: A substantial unexplained benefit to the solicitor invites scrutiny; an ordinary properly explained fee agreement is not automatically invalid.

What did Birmingham City Council v Forde [2009] illustrate about undue influence?

The court distinguished the relationship of influence from an inference that it was improperly exercised. On the facts, the replacement CFA did notattract the presumption of undue influence.

Example: Assisting the solicitor to regularise funding was explicable by ordinary motives.

Is an agreement obtained by undue influence void or voidable?

Voidable, rather than automatically void. It remains effective unless set aside; equitable relief may include conditions addressing reasonable remuneration for services genuinely provided.

Example: Rescission does not necessarily mean the client receives all valuable legal services free of charge.

What role does consideration play in amending a retainer?

A contractual variation or replacement generally needs legally sufficient consideration, unless an effective deed or another applicable principle removes that need.

Example: In Forde, the replacement obligations, including the commitment to continue acting, supported the new arrangement; merely demanding more for an existing obligation requires separate analysis.