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Commercial: Mitchelled? Should a solicitor withdraw from acting?

...In Garbutt -v- Edwards [2006] 1 WLR 2907 the Court of Appeal rejected the submission that failure to provide

...a client with a costs estimate required by the Solicitors’ Practice Rules 1990 rendered the retainer between solicitor and client unlawful and unenforceable.

Today the SRA Code of Conduct, like the Solicitors’ Practice Rules, has statutory force: Swain -v- The Law Society [1983] 1 AC 598 and Mohammed -v- Alaga & Co [2000] 1 WLR 1815. Chapter 3 deals with conflicts of interest and includes a prohibition against acting where there is an ‘own interest conflict’:

“You can never act where there is a conflict, or a significant risk of conflict, between you and your client”.

In detailed assessment proceedings before Master Rowley, the claimants had been Mitchelled for failing to serve Precedent H and the court had imposed the sanction prescribed by CPR 3.14 limiting recoverable costs to court fees only. Subsequently, the defendants had accepted Part 36 offers, entitling the claimants to 50% of their costs pursuant to CPR 36.23.

The defendant paying party argued that:

  1. the failure to file and exchange Precedent H was a cast iron beach of duty;
  2. if the claimants won the case, they would have a claim against their solicitor for 50% of their costs;
  3. if the claimants lost the case, they would not recover costs and would have no claim against their solicitors;
  4. it was therefore in the solicitor’s interest to lose the case;
  5. there was therefore an ‘own interest conflict’; and
  6. the solicitor was obliged to withdraw;
  7. failure to withdraw was in breach of the SRA Code of Conduct rendering the retainer unlawful and unenforceable, so not even 50% was payable.

Since Swain -v- The Law Society and Mohammed -v- Alaga & Co, the Supreme Court has, in Patel -v- Mirza [2017] AC 467, overhauled the law concerning contracts tainted with illegality.

Master Rowley is to decide whether:

a)  a solicitor is bound to withdraw if Mitchelled; and
b)  whether the retainer is enforceable if the solicitor does not.
The Court of Appeal did not suggest in Mitchell -v- News Group Newspapers [2014] 1 WLR 795 or Denton -v- White [2014] 1 WLR 3926 that the solicitors should have withdrawn.

Richard Power / 10th Oct 2018


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