Unbundled legal services and the risk of solicitors negligence

Any eagle-eyed student of the legal process will have noticed that just over three years ago, there was a huge re-write of the way that legal services were funded. Since 1998, people having problems funding litigation could find a solicitor who would defer payment of their services until the conclusion of the claim: if the client lost, the solicitor wrote off their fees; if they were successful, the client could recover from the opponent the solicitor’s basic costs along with an uplift to reflect the risk the solicitor was taking in backing the claim (known as the “success fee”). On top of that, a successful party could recover from the other side any premium they had to pay for insurance to protect them against the risk of an adverse costs order. However, all this changed on 1st April 2013 when the government introduced the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Following the reforms any success fee or insurance premium could no longer be recovered from the losing party – the successful litigant had to pay for it themselves out of their damages. Since long before LASPO came into effect, I have been an opponent of these reforms as they not only restrict access to justice, they deny justice. In the field I specialise in (professional negligence), the aim is to put the parties back in to the position as if the negligence had not occurred. To give an example: a full structural survey is obtained when a property is purchased saying that all is well only for the purchaser to find that £50,000 needs to be spent on underpinning or damp proofing or rebuilding or suchlike and that such defect, should have been noticed by the surveyor. The purchaser sues the surveyor for the £50,000. That £50,000 is needed to cover the cost of the works yet, because of the changes brought in by LASPO, some of that £50,000 must now be used to fund the costs of the litigation. Through no fault of their own, the client is left out of pocket , in some cases substantially so. It can be argued that the Client could pay the costs themselves and avoid a success fee but let’s face it, who has sufficient savings to litigate? That was why No Win, No Fee agreements were introduced in the first place.

Many people are therefore now resorting to acting in person – “litigants in person” is the correct term, or “LIP” – especially where the losses are at the lower end of the scale. But a LIP rarely has the legal knowledge or expertise to properly conduct a case, so in many instances they seek legal advice from a lawyer: Just a bit of advice on how to run a claim, the merits of a case, the procedure of a claim and so on. They are not asking the solicitor to run the entire case from start to finish in the conventional way, but to, in effect, stand behind them when required to give some professional guidance. It is in effect, ad-hoc legal advice or, as it is now known in legal circles, an “unbundled service”.

However, whilst unbundled legal services might seem like a good idea, they raise serious and important questions, especially for the solicitor and their insurers. No matter how much guidance a solicitor can provide, once the advice has been given and the consumer then acts upon it, is the solicitor then responsible for the result? More importantly, should the solicitor be liable for something that was outside the remit of his instructions?

This question consumed the Court of Appeal last November (2015) in the case of Minkin –v- Landsberg [2015] EWCA Civ 1152. In that case, the Claimant (M) was acting for herself in divorce proceedings. She asked the Defendant (L), a practising solicitor, to help her draft the Consent Order finalising the financial provision details of the divorce. L did this but later, M came to regret settling and sued L, claiming that L had failed to advise her that settling was not in her best interests. Going up to the Court of Appeal, the law lords confirmed the original Trial Judge’s finding of fact that L’s retainer was limited purely to drafting the consent order and as such the lawyer did not have a duty to give the broader advice or warnings for which M contended. The decision was welcomed with relief by both solicitors and LIPs alike as without such an unbundled service, many LIPs would either be forced to pay greater fees to deal with a case, to continue litigation in the hope that they can get by on internet searches or to just give up.

That was until the Court of Appeal decision in Sequence Properties Ltd –v- Kunal Balwant Bhai Patel in May 2016. The Judgment has not  been released at the time of publishing this piece so the fine details behind the decision are unknown. However, the case related to an application for relief from sanction in that the Applicant (“A)” had filed his appeal bundle nine days late and had failed to serve it on the proposed Respondent (R). To be fair to A, the Court Order only stated that the Appeal Bundle had to be filed (at Court) not served (on R) but as A had sought assistance from a solicitor on preparation of the bundle, the Court felt that a retainer limited to preparation of a bundle was not a good enough reason as to why the bundle was not filed and served on time. The solicitor should have warned A about the time limits and should have been aware that the bundle had to be served on R. The case was not one about professional negligence but the comments arising from the Court of Appeal, criticising the unbundled service, is a serious blow for LIPs especially as the government, the courts and the Legal Services Board have all been encouraging solicitors to provide unbundled services. Indeed, in Minkin, Lady Justice King stated:

‘There would be very serious consequences for both the courts and litigants in person generally, if solicitors were put in a position that they felt unable to accept instructions to act on a limited retainer basis for fear that what they anticipated to be a modest and relatively inexpensive drafting exercise of a document (albeit complex to a lay person) may lead to them having imposed upon them a far broader duty of care”.

With the judgment in Sequence potentially putting solicitors off offering these services, it is going to be difficult for litigants in person if they can no longer seek advice under a restricted retainer. What it does mean though is that a number of solicitors – and indeed LIPs – are going to be reviewing advice given and received in the past to see whether the unbundled service provided was adequate or, in light of Sequence, potentially negligent.


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