Cathryn Hulme v Handley Law Ltd

A solicitor may terminate a retainer where the agreement permits termination for good reason and the client’s conduct gives rise to substantive allegations of dishonesty, a breakdown in confidence, or an inability to obtain proper instructions. Where the client’s case can no longer properly be advanced consistently with the solicitor’s professional obligations, the solicitor need not undertake further enquiries or re-instruct experts before terminating, provided the evidential position is sufficiently clear. A valid termination may entitle the solicitor to recover costs and disbursements under the retainer.

The defendant solicitors represented the claimant in a clinical negligence claim under a conditional fee retainer. The retainer permitted termination on written notice for good reason, including insufficient instructions, breakdown in the relationship, or circumstances preventing the firm from continuing to act.

After evidence emerged suggesting that the claimant had materially understated her beauty business and physical activities, the defendant concluded that allegations of dishonesty were substantive, that the claimant had failed to provide proper instructions, and that professional obligations prevented continued representation. The claimant challenged the termination and denied that the defendant was entitled to payment for its work. The central issue was whether the retainer had been lawfully terminated.

1. The claimant’s challenge failed. The defendant was entitled to terminate the retainer with immediate effect and to seek payment of its costs and disbursements under the contractual terms.
2. The retainer required written notice and a good reason for termination. The contractual examples included inadequate instructions, a breakdown in the relationship, legal or professional impediments to continued representation, and work already done becoming chargeable.
3. The evidence showed that the claimant had repeatedly given materially inconsistent accounts of her beauty work and business activities. Those inconsistencies substantially undermined her clinical negligence case and the instructions on which the defendant had been acting.
4. The allegations raised by the opposing party were substantive enough to engage the termination clause. The defendant could not properly advance a case which depended on accounts it had reasonable grounds to regard as untrue, having regard to its professional obligation not to mislead the court or others.
5. The defendant was not required to make further enquiries or re-instruct experts before terminating. By 21 June 2021 the evidential discrepancies were sufficiently clear, and the claimant’s response supplied no credible explanation. The withdrawal of counsel and the after-the-event insurer reinforced, but did not determine, the defendant’s entitlement to terminate.
6. The claimant had failed to cooperate with the defendant and had not complied with her contractual responsibility not to mislead it. The defendant was therefore entitled to terminate the retainer and recover costs and disbursements in accordance with its terms. (See paras [168]–[174].)