Lyons v Fox Williams LLP

A solicitor’s retainer is defined by the work agreed with the client, together with advice reasonably incidental to that work. A solicitor may also have to warn of an obvious risk discovered while carrying out the retainer, but is not a general insurer against legal problems outside its scope. Where an international agreement is being reviewed, the solicitor must identify the risks arising from the absence of an appropriate governing-law and jurisdiction clause and advise the client accordingly. Breach does not establish recoverable loss where the client knowingly accepted the risk or the counterparty would not have agreed to the proposed term. Loss-of-chance damages require a real and substantial chance of a favourable third-party outcome.

The claimant, an EY executive, suffered serious injuries in a motorcycle accident and pursued claims under accidental death and dismemberment and long-term disability policies. He retained the defendant firm, principally through Mr Custance, initially in relation to the accidental death and dismemberment and misrepresentation issues.

The claimant later alleged that the retainer extended to long-term disability advice and that Mr Custance negligently failed to advise on those policies. He also alleged negligence in failing to ensure that a 2009 agreement governing his departure from EY contained an English law and jurisdiction clause. The court determined the scope of the retainer, any duty to warn, breach, causation and the hypothetical value of the disability claims.

1. AD&D advice. Mr Custance was negligent in relying on the members’ booklet without obtaining and reading the policies themselves. The settled AD&D claim therefore disclosed negligence, although it was not tried as a damages issue.
2. Scope of retainer. Applying the principles summarised in Minkin v Landsberg, the original retainer was confined to the AD&D and related misrepresentation issues. References to long-term disability were contextual or part of negotiation strategy. They did not amount to an agreement that substantive advice on the LTD policies would be provided.
3. Duty to warn. The principles stated in Boyce v Rendells, County Personnel (Employment Agency) v Pulver and Credit Lyonnais SA v Russell Jones & Walker did not impose a duty on these facts. Mr Custance had not become aware of an LTD risk in the course of the work he was retained to perform, and the claimant was an astute businessman who was using him as a targeted resource.
4. English law and jurisdiction. Mr Custance was negligent in failing, when reviewing the 2009 agreement, to identify the absence of an English law and jurisdiction clause and to recommend strongly that one be included. His limited involvement and expertise in international claims made that advice necessary.
5. Causation. The claimant knew the clause was absent and deliberately accepted the risk. In any event, EY would not have agreed to its inclusion. The omission therefore caused no recoverable loss in the 2009 agreement claim. The Russian-law issues would not have altered that conclusion.
6. LTD claims. Hypothetically, proper advice might have left a real and substantial chance of recovery under the policies. Applying Allied Maples Group Ltd v Simmons & Simmons, the hypothetical loss was assessed at $2,765,095 after a 50% discount. Those findings were unnecessary to the outcome because no relevant retainer or duty had been established.
7. The court left contributory negligence and the contractual limitation of liability unresolved.

First-instance decision. No appellate history is stated in the judgment.