Status

This guidance is to help you understand your obligations and how to comply with them. We may have regard to it when exercising our regulatory functions.

Who is this guidance for?

All SRA-regulated firms, solicitors, registered European lawyers, registered Swiss lawyers and registered foreign lawyers. Any reference in this guidance to solicitors includes registered European lawyers, registered Swiss lawyers and registered foreign lawyers.

Purpose of this guidance

To clarify the circumstances in which a solicitor or firm may be entitled to terminate an existing client retainer.

Our concerns

This guidance provides practical advice to solicitors and firms on the circumstances in which they are entitled to terminate a client retainer. It does not address the termination of a client retainer by the client or any events or circumstances which would ordinarily result in the automatic termination of a client retainer (for example, the death of a client).

The question of whether a client retainer can be terminated is primarily a matter for the common law rather than our rules. Our concern as a regulator is to make sure that a solicitor or firm has carefully considered the legal position and understood and mitigated any risks to the client arising from the termination of the retainer so far as they are able to do so.

Our expectations

Under the common law, a client retainer accepted by a solicitor or firm is, in the absence of agreement to the contrary, an entire contract to conduct a matter to its conclusion.

Consequently, a solicitor or firm is not entitled to terminate an existing client retainer without a 'good reason' and is also required to give the client 'reasonable notice' of their intention to terminate a retainer (see Underwood, Son & Piper v Lewis [1894] 2 QB 306).

The need for a 'good reason'

We expect any solicitor or firm contemplating the termination of a client retainer to review the surrounding facts and establish on a case-by-case basis if there is a 'good reason' to terminate.

This review should consider relevant caselaw and guidance. It should also consider any contractual terms of business or letter of engagement, particularly those terms addressing the termination of a client retainer. While relevant to the legal position, these contractual terms cannot override the common law or our rules.

A solicitor or firm should inform the client of the termination of their retainer in a way they can understand, having considered and taken account of their attributes, needs and circumstances (see paragraphs 3.4 and 8.6 of the Code of Conduct for Solicitors, RELs, RFLs and RSLs and paragraphs 4.2 and 7.1(c) of the Code of Conduct for Firms).

We recognise that there may be situations in which a solicitor or firm is unable to disclose the underlying reason(s) for the termination to the client (for example, where there are concerns that this could result in serious harm to themselves or others or where to do so would amount to tipping off).

Non-exhaustive examples of a 'good reason'

A solicitor or firm is likely to have a 'good reason' to terminate a client retainer where continuing to act for a client would result in a breach of their legal or professional obligations.

This could include:

• where a solicitor or firm has concluded that their duty to act in the best interests of the client conflicts with their own interests (see paragraph 6.1 of the Code of Conduct for Solicitors, RELs, RFLs and RSLs and paragraph 6.1 of the Code of Conduct for Firms)
• where a solicitor or firm has become aware of a conflict of interest between the client and another client and has concluded that they can no longer act for the client (see paragraph 6.2 of the Code of Conduct for Solicitors, RELs, RFLs and RSLs and paragraph 6.2 of the Code of Conduct for Firms)
• where a client insists on a solicitor or firm making a submission to the court which they do not consider to be properly arguable (see paragraph 2.4 of the Code of Conduct for Solicitors, RELs RFLs and RSLs, paragraph 7.1(a) of the Code of Conduct for Firms and Richard Buxton (Solicitors) v Mills-Owens [2010] EWCA Civ 122)
• where a solicitor or firm is obliged under regulation 31 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 not to form a business relationship with the client, or to terminate an existing business relationship with them, due to being unable to apply customer due diligence under regulation 28
• where a solicitor or firm becomes aware that a client has committed perjury or misled the court in any material matter and the client does not agree to disclose the truth to the court.

Other situations where a solicitor or firm may have a 'good reason' to terminate a client retainer include:

• where a solicitor or firm is unable to obtain clear instructions from a client
• where there has been a breakdown in trust and confidence between the solicitor or firm and a client
• where a client has engaged in offensive or discriminatory behaviour, particularly if the client has been put on notice by the solicitor or firm that this may entitle them to terminate the retainer (see our guidance on Principle 6 for some relevant examples)
• where a client has failed to provide funds for disbursements
• where a client has failed to pay a reasonable sum on account of costs incurred or to be incurred in the conduct of contentious business within a reasonable time following a request by a solicitor or firm (see section 65(2) of the Solicitors Act 1974).

The need for 'reasonable notice'

Any solicitor or firm wishing to terminate a client retainer will need to establish on a case-by-case basis how much notice should be given to a client to meet the 'reasonable notice' requirement.

What amounts to 'reasonable notice' will depend on the circumstances of the client matter. An important consideration will be the period needed for the client to instruct a new solicitor or firm and for the new solicitor or firm to become familiar with the matter.

Where the client matter involves court proceedings, giving notice to a client to terminate a retainer shortly before a scheduled hearing is less likely to meet the 'reasonable notice' requirement. Conversely, giving this notice several weeks before a hearing date is more likely to satisfy this requirement.

We recognise there are situations which may justify a client being given little or no notice of termination, for example where a solicitor or firm has become aware that a client has deliberately misled the court.

Termination must be lawful

Any decision by a solicitor or firm not to act for a client must itself be lawful.

We expect solicitors and firms to comply with the law (see paragraph 7.1 of the Code of Conduct for Solicitors, RELs, RFLs and RSLs and paragraph 2.1(a) of the Code of Conduct for Firms).

Solicitors and firms should have regard to the Equality Act 2010 and related statutory guidance when considering whether it would be lawful to terminate a client retainer. The Act may be relevant where the reasons for terminating a client retainer are connected to one or more of the protected characteristics set out in the Act.

In line with our enforcement strategy, we will always take allegations of discrimination seriously. This would include any complaint that a solicitor or firm has terminated a client retainer in breach of the Equality Act 2010. The Equality and Human Rights Commission issues guidance on compliance with the Act on its website which should help solicitors and firms understand their obligations.

We would remind solicitors and firms that our rules require all those that we regulate to act in a way that encourages equality, diversity and inclusion (see Principle 6) and not to unfairly discriminate by allowing their personal views to affect their professional relationships and the way in which they provide their services (see paragraph 1.1 of the Code of Conduct for Solicitors, RELs, RFLs and RSLs and paragraph 1.1 of the Code of Conduct for Firms).

The need for mitigation

Wherever possible, a solicitor or firm should seek to mitigate any risks to the client arising from the termination of the retainer. Depending on the circumstances, this might include:

• assisting the client to obtain alternative legal representation
• providing assistance to a replacement solicitor or firm so that they can become familiar with a case or matter
• notifying affected third parties (such as the court, the Legal Aid Agency or counsel)
• informing the client of any impending deadlines or imminent action that they need to take to protect their position in a case or matter.

Taking action

We will consider taking action where we receive allegations of wrongdoing with respect to the termination of a client retainer, and may start regulatory proceedings where we find evidence of misconduct.

Any solicitor or firm in doubt about how to approach the termination of a client retainer should contact our Ethics Guidance helpline for advice.

Further help

If you require further assistance, please contact the Professional Ethics helpline.