A professional firm has seen off a claim for damages by a client as its retainer letter clearly set out the limit of its duties.  “This case is yet another reminder of the vital role played by a well-drafted retainer in protecting professional firms from opportunistic claims by disgruntled clients,” said James Burgoyne, Director – Claims & Technical, Brunel Professions.

In 2000, Mr Paul Denning had instructed financial adviser, Alexander Forbes, to advise on the transfer of his occupational pension.  By 2008 Mr Denning had become dissatisfied with Alexander Forbes’ services and appointed Greenhalgh Financial Services Ltd in its place.  Their retainer letter clearly set out that Greenhalgh’s duties were limited to arranging deals in investments and contracts of insurance.

In 2009/10 Mr Denning complained to the Financial Ombudsman about Alexander Forbes’ advice, but was told that his claim was out of time.  He also started a legal action for damages, but this too was abandoned as it was outside the six year time limit to bring a claim.

Having been unsuccessful with his initial claims, Mr Denning then started an action against Greenhalgh, claiming that it had failed to review Alexander Forbes’ recommendations and to advise him on the time limits for bringing a claim.

At trial Mr Justice Green found that Greenhalgh owed no duty to advise on the possibility of a claim against Alexander Forbes and denied Mr Denning’s claim.  He cited a number of reasons, including that Greenhalgh was not provided with the information nor paid to advise on Alexander Forbes’ recommendations.  In addition he said that providing advice on the Alexander Forbes transfer would have been work of a completely different nature to that set out in the retainer letter.

This case shows that the courts are unlikely to extend the scope of a professional firm’s duties to its client beyond those set out in the retainer letter, unless the work is of a very similar nature or the retainer is altered by a course of conduct,” said James Burgoyne, Director – Claims & Technical, Brunel Professions.  “It underlines the importance of agreeing a clear written retainer at the outset.”

The case has been widely reported, including by law firms DWF, Bond Dickinson and Walker Morris.

We would like to highlight a section of DWF’s commentary as follows:

“This case serves as a useful reminder of how important it is for professionals to set out in writing and in unambiguous terms, the scope of the retainer at the outset of any instruction. This takes on an even greater importance for those instructions that have a particularly complex historic background and in respect of which other professionals may have advised previously. It also serves as a timely reminder to those professionals that act for longstanding clients and who may have ‘ongoing’, ‘background’ retainers, to keep the written retainer under review and, as and when a matter develops, to consider if the retainer is adequate and if not whether it needs updating or a new, separate retainer altogether.”

Brunel provides expert professional indemnity insurance broking services to professional firms.  Click here to find out more, or call Mark Sommariva on 0203 475 3275.