Clearly defining and recording clients’ instructions can protect lawyers against litigious clients.  Law firm Wright Hassall recently had a negligence claim against them thrown out by the Court after they proved that their client’s instructions had been clearly set out in writing.  This simple procedure prevented the client from claiming that Wright Hassall had a ‘general duty to advise’.

Mr and Mrs Chandra, the owners of BPC Hotels, borrowed £10m from RBS to buy an office building in Manchester and convert it into a luxury hotel.  The project ran into difficulties and the bank demanded additional guarantees from the Chandras.  The couple agreed after taking advice from law firm Brooke North.

Soon after, the development failed and RBS demanded repayment from BPC Hotels, appointing receivers.  The Chandras concluded that Brooke North’s advice had caused the project to fail and instructed Wright Hassall to act for them in a negligence claim against the firm.

Shortly after proceedings were issued against Brooke North, Wright Hassall terminated their agreement with the Chandras as they had failed to pay money on account for costs.  Mr and Mrs Chandra decided to continue the case in person and asked the court to change the basis of their claim against Brooke North.  Their request was declined as the claim was by now outside the six year limitation period.  The case continued on its original basis and the Chandras were awarded around £370,000 in damages.

Mrs and Mrs Chandra went on to accuse Wright Hassall of negligence, hoping to recover damages of around £50 million.  They alleged that Wright Hassall should have advised them that there was an alternative strategy they could have followed in their original claim against Brooke North.  The High Court summarily dismissed the case because the scope of Wright Hassall’s retainer had been clearly defined in writing and excluded a duty to advise on alternative strategies.

Any lawyer who treats writing and sending out retainer letters as a tedious box ticking exercise would be well advised to study the details of this case,” said Jonathan Filer, Director – Head of Business Development, Brunel Professional Risks, said: “Wright Hassall was able to defend itself because it had done the basics well and got their clients’ instruction down clearly in writing.  Professional indemnity insurers want to insure law firms with robust risk management and excellent procedures – this case demonstrates exactly why this is the case.

The case has been reported by Legal Futures and Counsel Magazine.

Bond Dickinson flagged an important point in relation to “mission creep” in their article which we would like to highlight:

“Practitioners instructing counsel should also give careful thought to what they are asking counsel to advise upon and ensure that this is aligned with their instructions so as not to inadvertently widen the scope of their retainer.”