The extent of a solicitor's duty to advise is a question which exercises those defending professional negligence claims and their insurers. What is a solicitor's duty when responding to "one-off" requests for information or advice on questions which are incidental to the retainer or even where there is no retainer? While each case will turn on its own facts, the Court of Appeal decision in Spire Property Development LLP & Anor v Withers LLP  EWCA Civ 970 provides some helpful observations for solicitors and their professional indemnity insurers.
In 2012 Withers were retained by two developers to act in connection with their £41.8m purchases of two Grade II listed properties in West London. The properties shared a common boundary and the plan was for them to be re-developed in parallel into three luxury houses and flats.
Fourteen months after the deal completed, the developers contacted Withers following post-acquisition discovery of three extra-high voltage electric cables (HVCs) running under both development sites and owned by UK Power Networks (UKPN).
The key information requested by the developers related to:
- Whether the pre-acquisition enquiries should have revealed the existence of the cable
- The extent of UKPN's statutory rights of access
- What legal documentation would be required for a third party to lay such a cable.
The developers added that they needed to decide how to approach UKPN about this issue so it "would be very helpful to get [the solicitor's] thoughts on the above". Withers duly responded to the questions asked and did not proffer further advice. The developers assumed that the HVCs could not be moved and made adjustments to and scaled back the size of the developments in order to avoid the HVCs.
In fact, there were options open to the developers in the event that UKPN could not provide documentation to support its rights in respect of the HVCs. In 2018 the developers sued Withers and alleged that they should have carried out sufficient searches or enquiries to identify the HVCs in 2012 (the 2012 claim) and they should have advised in 2014 as to the developers' rights and remedies upon discovery of the HVCs (the 2014 claim). Had Withers done so, the developers said they would have sought to renegotiate the purchase prices in 2012 and avoided wasted expenditure, additional costs and losses arising from changes to the layout of the development.
The judge at first instance found in favour of the developers on both the 2012 claim and the 2014 claim. He said that Withers should have carried out a specialist powerline search or at least asked if one was required. He also found that Withers owed a tortious duty of care to advise the developers on their rights and remedies in 2014 which they failed to do.
Withers' challenge on appeal was solely on the judge's findings on the 2014 claim.
The extent of a solicitor's duty to advise
In the leading judgment, LJ Carr observed that it was important "that solicitors are able to respond courteously and constructively to 'one-off' requests for information or advice from former or potential clients or third parties without fear of creating legal liability".
Where there is a retainer in place with a client, the general principle as affirmed by the Court of Appeal is that a solicitor's duty is limited to carrying out the tasks requested as well as those matters which are "reasonably incidental" to the work. Each case will turn on its own facts but relevant factors as to whether something is "reasonably incidental" might include:
- The character, sophistication and experience of the client
- The extent of the burden that the allegedly incidental task places on the solicitor
- The level of fees charged.
Where there is no retainer, different considerations arise and the general principle is that a solicitor is taken to have voluntarily assumed a legal duty where they undertake responsibility for a task. This is determined by asking, without the benefit of hindsight, whether responsibility should be held to have been assumed by the solicitor to the claimant in the context of the actual exchanges between them. Context is key.
In the present case, the request for information was made long after the retainer had ended and therefore Withers would only be liable for the 2014 claim if they had assumed a responsibility to advise on the developers' rights and remedies against UKPC. The Court of Appeal held that they did not do so and placed significant weight on:
- The communications between Withers and the developers and the nuances in the choice of language used. LJ Carr noted that "this is not the language of a request for definitive advice by a commercial developer on a point of potentially significant financial value"
- The context for the communications including the fact that there was implicit criticism of Withers by the developers and the developers had said they wanted the solicitor's "thoughts" to help them decide how to approach UKPN
- The broader context – in particular the uncertainty around the factual position at the time
- The level of sophistication of the developers – "highly experienced and well-resourced".
Whether there is a duty to advise on "reasonably incidental" matters in a non-contractual context such as in the present case was a question which LJ Carr preferred to express "no concluded view upon" as the debate did not need to be resolved on this appeal.
Lessons to be learned
The extent of a solicitor's duty to advise on "one-off" requests will depend on the context and facts of each case.
Where there is a retainer in place with the client, a solicitor will be obliged to advise on those matters which are "reasonably incidental" to the work. However, where there is no retainer, a solicitor will only be liable if they assume a responsibility to advise on the issue in question. Much will depend on the language used, the context both for the communications and more broadly as well as the sophistication of the clients.
LJ Carr offered the following advice:
"when volunteering any such information or advice, solicitors need to take care to identify the limits of any assumption of responsibility in order to avoid the risk of litigation such as the present. Equally, those seeking information or advice from solicitors on an informal basis need to take care to understand the potential limits of the exercise and the extent to which they can reasonably rely on any response."
A fine balance. And not always an easy path to tread for solicitors concerned about their commercial relationship with clients.