Would you rather your solicitor suspended you or terminated you?

Of all the tawdry squabbles I deal with, few are more bitterly disputed than attacks on a solicitors entitlement to be paid.  So of course, I love them! Now the concept of your solicitor as Arnie, the Terminator, may not spring to your mind, nor as a sort of latter day Pierrepoint (Albert Pierrepoint).  However, the distinction between being suspended or terminated, it's now clear, could be worth a lot of money!

The law recognises that solicitors are in a particularly good position to be able to overcharge their clients and it has given clients the right to have costs reviewed in detail either by an external assessor (via a remuneration certificate) or by a costs judge.  The rules which apply to these applications are fairly complicated and in some respects favour the solicitor, who knows (or should know) what they are.  However, there was a very sobering judgment some time ago in a case called Buxton v. Mills-Owen.  This ultimately resolved in the solicitor's favour, but only after it reached the Court of Appeal.   However, what the court accepted was that if a solicitor doesn't have a valid reason to terminate a retainer, he/she can't charge for any of their work at all!  In other words, if a solicitor doesn't see a case through to the end and doesn't have a good reason for baling out, he/she has to refund all the fees charged up until that point.

And that's what occupied the Court of Appeal in a recent case reported here:

Cawdery Kaye Fireman & Taylor v. Gary Minkin

The court, to cut a rather long story very short, had to decide whether a client was entitled to a refund of all the fees he had paid.  It was a case in which the client had fallen out with his solicitor during an application for a non molestation injunction and ouster order - a pretty commonplace family law situation.  The firm gave a costs estimate of £3,000 plus VAT and then very shortly afterwards increased it to £3,500 plus VAT - a little over £4,000 at the time.  However, barely a fortnight later, the client received a bill for just short of £5,500 in total - over a third more than the estimate.

What occupied the court then was deciding exactly what had happened next.  According to the client, the solicitor terminated the retainer because he didn't pay the whole of the bill.  Where it all gets rather bizarre is that the shortfall on what he had paid was just over £2,700 out of a total of just over £5,700.  And this went to the Court of Appeal, remember!  The client asked the court to assess his solicitor's costs.  The assessing judge did two things - first of all he said that the retainer had been wrongly terminated, so the solicitor should reimburse all his costs.  Secondly he said that if he was wrong about that, he would assess the bills.  He reduced them to the figure of just over £5,700 - a reduction of just over 20%.  £7 more than 20% actually.  Once the court has reduced them by over 20%, it's the solicitor who has to pay all the costs and in this case the client's costs amounted to £17,650!

The solicitors appealed.  The Court of Appeal agreed with them that what they had actually done was suspend the retainer pending payment of their bill, not terminate it.  It was the client who had terminated it because they wouldn't take any further steps until they were paid.  As a result, the client remained liable to pay them the £5,700.  However, the solicitors were still lumbered with the costs of detailed assessment, which amounted to more than three times the amount they recovered.  Now I daresay that the client would have had to pay the costs of the appeal, amount unknown.  So who were the losers?  Clearly both of them!  Sadly, not unusual in litigation.

Blog Disclaimer: Nothing in www.austinkempfamilylaw.blogspot.com blog should be construed as legal advice. If you require legal advice upon any family law related matter then you should instruct a solicitor. Any links to other blogs or web sites are provided for convenience only and Austin Kemp Solicitors cannot accept any responsibility for the contents of such linked blogs/sites.

Ouch! That hurt.

A case called F v. F has just been reported in the High Court before Mrs. Justice Macur.  It starts with the following:

" This ancillary relief dispute has been the subject of 3 substantive directions hearings and conducted at final hearing by specialist matrimonial leading and junior counsel on each side, instructed by specialist matrimonial solicitors and costing the husband and wife £2.4 million between them. Both the husband and wife have been surrounded by a legal entourage of at least 5 personnel throughout the 8 days of proceedings in court. I regret that these statistics have not ensured compliance with rules of evidence, the Pre-action Protocol and Family Proceedings Rules 2010 or the spirit of Practice Direction 25A effective for proceedings commenced post 6 April 2011."  (my emphasis throughout)

There's no way of avoiding it - that is, to say the least, highly embarrassing for any professional involved in the case.  Then it gets worse:

" In these circumstances the raised emotions, distrust, entrenched positions and consequent waste of court time were entirely predictable. The position has not been ameliorated by the apparent disinclination of Counsel to communicate throughout the hearing save in the Court room itself culminating in the necessity for me to direct the exchange of written closing submissions before I was addressed on the same since otherwise "the usual practice" of providing them just at the moment when the address began would have been followed.  It is difficult to conceive that either party can have their expectations realistically managed in such a scenario."

So it continues throughout a truly biting judgment, much of it entirely predictable, some of it specific to the case:

" The wife's budget for the purpose of establishing her maintenance needs was opened as "aspirational". It is entirely unrealistic and without historical basis or reasonable future projection."  Nothing terribly new there, then. 

" I refused permission to admit as evidence in the case that part of the wife's sole expert addendum report which dealt with his opinion of "indexation" of the 1993 value of Franklin. It was not sanctioned by Court order nor considered in the pre-trial review, nor consented to by those representing the husband. It was triggered by the invitation of the wife's leading Counsel to re-consider a concession made in the first expert meeting. Its inclusion within Mr Mathew-Jones addendum report was tantamount to ambush reminiscent of the approach taken to the valuation of the life interests in Peyton Place. The husband was not in a position to gainsay the opinion expressed by seeking his own expert in the time frame imposed by receipt of the report and the date of the final hearing."  So, ambushed by an expert report for which permission had not been sought or given - not really a matter of unusual complexity, surely?

" I make clear, as I did on several occasions during the hearing, that I dismiss any hearsay evidence from my mind.  The contents of solicitors' notes, the parties' accountant's notes or the memory of the managing director as to what the husband said to them at the time of making the agreement are inadmissible as evidence of the truth of the contents of the husband's conversations/instructions. The maker of the statements, the husband, was always known to be available and has been called to give evidence. The fact of the conversation is only relevant to rebut any allegation of recent fabrication, which is not alleged here. It is therefore inadmissible. Regard to these rules of evidence would have obviated the need to produce the voluminous documents or associated witnesses." 

"The fact that I have determined the issue in favour of the husband does not deflect my criticism of the husband's solicitors for failure to consider the need to make on-going "full and frank disclosure" of documents relevant to issues in the case.  It is not for Leading Counsel for the husband to pronounce the issue "closed" or to rely upon the lack of specific direction for disclosure of such documents at the pre-hearing review."

" No doubt in support of this proposal the wife attempted to adduce evidence of Dr Simon Turner, a "strategic consultant". I requested Mr Pointer QC to reconsider his expressed intention to call this witness. He did so. I make clear that I would have refused to admit the evidence on a number of bases:

(i) no permission was sought/granted for it to be admitted as an expert report; (ii) it expresses opinion whilst expressly acknowledging lack of expertise;
(iii) it expresses opinion upon company issues which are irrelevant to my consideration and, I may say inherently offensive in the context of a very successfully run company and likely to engender resentment between present board members and the wife who has sought to introduce it. My decision on the outcome of the share agreement is not influenced by the business experience/acumen of the wife nor her ideas for the future of the company. In short a pointless, costly and counter-productive exercise."

And then perhaps worst of all....

" Mr Pointer QC in his closing submissions is dismissive of the exercise conducted by Mr Adams-Cairns. For the reasons outlined in paragraph 57 above I agree there is no question but that this expensive exercise was futile. This may have explained why no steps were taken by those representing the wife to seek clarification of the joint expert report but for the fact that the wife attempted to produce a sole "expert" report on this issue into evidence on the first day of the hearing without any notice to the husband and subsequently dispatched that report to Mr Adams-Cairns when I had refused to admit it. This behaviour, whether in ignorance, neglect or disobedience of civil/family rules of procedure amounts to malpractice and has the effect of conflating raised emotions and suspicion. There is absolutely no mitigation for the wife's solicitor sending to Mr Adams-Cairns the report that was ruled inadmissible. Its only purpose, objectively viewed, would be to seek to influence the opinion of Mr Adams-Cairns."

So here's my question - what exactly did the husband and wife get for their £2.4m legal fees?

One of the solicitors in this case has on its website not one but two articles headed "What makes a top divorce lawyer?"

Well, according to Macur J, perhaps the following?

1.  Disregard for basic rules of evidence - i.e. the hearsay rule;

2.  Disregard for the correct procedure for using expert evidence;

3.  A failure to comply with the pre-action protocol for finances on divorce;

4.  A failure to ensure the provision of full and frank disclosure;

5.  A failure to generate realistic expectations;

6.  Malpractice;

7.  Pointless, costly and counterproductive exercises.

I know very well from first hand experience just how demanding some wealthy clients can be.  It is often unfair to impute to the professional representatives the unrealistic or obstinate stances adopted by their clients.  However, when you spend six and even seven figures on your lawyers, listening to a judgment like this one must be an enormously dispiriting and even shattering experience.  As for how the lawyers felt......

Blog Disclaimer: Nothing in www.austinkempfamilylaw.blogspot.com blog should be construed as legal advice. If you require legal advice upon any family law related matter then you should instruct a solicitor. Any links to other blogs or web sites are provided for convenience only and Austin Kemp Solicitors cannot accept any responsibility for the contents of such linked blogs/sites.

Now this is genuinely frightening! Lloyds TSB v. Markandan and Uddin

The property market is in the doldrums and the problems which beset lenders find their way inevitably to the doors of the surveyors and solicitors who advise them.  However, the Court of Appeal has just handed down judgement in a case against a firm of solicitors which is rather out of the ordinary.  It's the case of the fake solicitors!  It's the rather shocking tale of a firm of solicitors having its identity stolen.


Deen Solicitors was a legitimate firm in Luton.  So far as I can tell, they no longer trade but back in 2007 they certainly did.  One of their solicitors was Jagtar S. Dhuphar.  In August 2007, someone called Victor Davies presented himself at another firm of solicitors, Markandan and Uddin, in Wanstead, saying that he had agreed to buy a house and was getting a mortgage of close to £750,000 to complete on it.  He instructed M & U to act for him and soon they heard from the Holland Park office of Deen Solicitors.  Unfortunately, although Deen Solicitors wrote on appropriate letterhead and talked the right language, the firm didn't actually have a Holland Park office - they had been the victims of identity theft!  Mr. Dhuphar didn't work in Holland Park and had nothing to do with this correspondence, even though it was purportedly his reference and signature on the letters.

The transaction meandered through to its intended conclusion, which was a planned simultaneous exchange of contracts and completion and this was the first error. If there had been a traditional exchange and completion separated by about a week, in which a deposit had been sent and signed contracts exchanged, perhaps the eventual problem would have been detected - well perhaps, anyway!

You see the true situation was that the owners of the house had no idea that their home was supposedly being sold! They were in America and the house was occupied by tenants.

Now there were various signs which could have made M & U suspicious, not least the fact that their client purportedly made payment of the difference between the purchase price and the mortgage direct to "Deen" and not via themselves.  The conspiracy was so brazen that at one stage apparently, someone claiming to be Mr. Dhuphar came to M & U's office for some reason or other - doubtless to add artistic verisimilitude to an otherwise bald and unconvincing narrative, as W S Gilbert might have put it.  Suitably lulled, M & U agreed completion by post and, bizarrely, after some unsatisfactory correspondence, sent over £700,000 to "Deen" without receiving even a signed contract, still less an executed transfer.

By the end of September, "Deen" had vanished, having never actually existed of course.  Unsurprisingly, the bank's £700,000 plus vanished with it and does not seem to have been seen since.

There are two big worries arising for solicitors as a result.  One is the potential for identity theft of solicitors firms where a criminal determinedly fakes a practice.  There is huge scope for stealing money as a result and not just by this particular type of mortgage based scam.  In fact, this should have been one of the harder frauds to pull off.  There were clear warning signs that something was badly amiss, as the Court of Appeal found when dismissing M & U's appeal.  However, suppose that those signs had not been present - what then?  Suppose that instead of failing to supply the necessary documents, "Deen" had sent through forged documents.  The fact is that solicitors are used to dealing with firms from all over the country, especially since the advent of referrers sending work to whichever firm is prepared to pay them a referral fee.  It never occurs to us to seek evidence confirming the identity of another firm of solicitors - are we now going to have to?

More troubling is an aside made by the Court in the judgment.  " If any such forgeries had duped the purchaser's solicitors, they might also have duped HM Land Registry, and the outcome might have been that purchaser and chargee would have been respectively registered as proprietors of the property and charge. By statutory magic, that would have given them titles to the property and charge respectively, albeit titles vulnerable to claims by the victims of the fraud to have the register rectified against them (see Schedule 4 to the Land Registration Act 2002). Such claims might or might not succeed."  (My emphasis).  It's this last point which will alarm the public.  One would have thought that if documents are nothing more than forgeries, there should be no question about setting aside a transfer, surely?  Is it really possible that a more competent fraudster could have deprived the legal owners of their property?

Blog Disclaimer: Nothing in www.austinkempfamilylaw.blogspo.com blog should be construed as legal advice. If you require legal advice upon any family law related matter then you should instruct a solicitor. Any links to other blogs or web sites are provided for convenience only and Austin Kemp Solicitors cannot accept any responsibility for the contents of such linked blogs/sites.