SOLICITOR AND CLIENT – retainer – duration, termination and change of attorney

PROFESSIONS AND TRADES – LAWYERS – SOLICITOR AND CLIENT – retainer – duration, termination and change of attorney – lawyers – liens – possessory lien – determination

Ireland v Trilby Misso Lawyers [2011] QSC 127

In the application, Mr Ireland sought declarations concerning the termination of the retainer under which his former solicitors acted on his behalf and that the file be delivered up to his present solicitors, Macrossan & Amiet, without payment of any fees or other provisions to secure costs and outlays. However, Trilby Misso claimed that they have a lien over the file and it should be protected. Therefore resolution required examination of whether monies were presently or likely to be one day owing to Trilby Misso and if so should any security be put in place to secure those costs? There is ample authority that a solicitor is bound to do what is necessary to institute or defend the action and to bring it to a conclusion before becoming entitled to payment of any profession fees: Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249. Further, a solicitor is not entitled to unilaterally terminate the retainer unless there is reasonable cause or just cause, involving a breach or repudiation of the retainer by the client.

However, in this case the parties had agreed to terms which altered the position at common law and resulted in the solicitors having the right to terminate the retainer prematurely when they become aware of material that altered their opinion regarding the prospects of success. The judge said although they did have that right, the solicitors did not terminate the retainer in accordance with the provisions of the agreement because they did not become aware of any material that altered their opinion regarding the prospects of success of the claim and Mr Ireland did not do anything that could be described as a breach or repudiation.

Under clause 2 the right to payment only arose if the firm were successful in obtaining damages or costs in connection with a client’s claim and clause 3 provided for "No win, no fees". Where there is no right to payment of fees or disbursements if the claim is unsuccessful, then the solicitors cannot gain a right to a payment because they change their view on the prospects of success as that would disregard clause 3, which was the fundamental basis Mr Ireland retained the solicitors and had been pointed out in Baker Johnson v Jorgensen [2002] QDC 205.

The judge stated at [18] that Trilby Misso may be able to demonstrate an entitlement under the restitutionary principles but it would depend on whether the client could take advantage of any work performed by them and that was presently unknown.

Trilby Misso were prepared to hand over their file but said they were entitled to have security put in place and Macrossan & Amiet to enter into a Deed with Mr Ireland effectively securing to Trilby Misso their outlays incurred up to a nominated amount.

In Stark v Dennett [2008] 2 Qd R 72, Keane JA said that where a solicitor has terminated the retainer without good cause the Court will not, in seeking to strike an equitable balance between the interests of the former solicitor and former client, be overly fastidious to ensure the adequacy of the former solicitor’s security for their fees.

The judge considered the two relevant circumstances were that the solicitors have, by their unwarranted act, placed the client in the invidious position of having the progress of his action stalled and of forcing him to seek further representation in order to progress and that those solicitors had only a speculative right to the payment of professional fees and outlays.

In the judge’s view, Trilby Misso were not entitled to maintain a possessory lien over the file because Mr Ireland did not presently owe them any money: Spence v Gerard Malouf & Partners Pty Ltd [2010] NSWSC 764 at [108]. As a result of this, they were not entitled to be satisfactorily secured as provided for under rule 23 of the Legal Profession (Solicitors) Rules 2007 as, in the judge’s view, in would be unequitable to require either the applicant or the incoming solicitors to provide the degree of security sought and that it was in the nature of the retainer that the solicitor took that they might never be paid. As a result no orders for security were made.