Scope of retainers
It is well established that, prima facie, the extent of any professional duty depends upon the terms and limits of the retainer. There have been several… Read more
It is well established that, prima facie, the extent of any professional duty depends upon the terms and limits of the retainer. There have been several cases in recent times where the courts had to consider the issue of whether a professional owed his client a duty to advice on matters that were beyond the scope of the work as set out in their retainer letter. One such recent case is Denning v Greenhalgh Financial Services Ltd  EWHC 143 (QB) where the court considered the scope of the duty of care owed, under the terms of a retainer, by a pensions adviser.
The claim concerns an allegation of professional negligence on the part of Greenhalgh Financial Services Limited (“GFS”) upon the basis that GFS was in breach of a professional duty (in tort and/or contract) owed to the claimant by not performing a detailed review of pension transfer advice given to the claimant some eight years earlier by unrelated advisers.
In 2000, the claimant instructed Alexander Forbes Financial Services Ltd (“AF”) to provide pensions advice. AF advised the claimant to transfer his occupational pension to another provider. In 2008, the claimant was dissatisfied with the service provided by AF and instructed GFS to provide advice on the management of his investments. In 2009 and 2010, the claimant complained to the Ombudsman regarding AF’s advice. But the Ombudsman found that the limitation period had passed in relation to the advice provided in 2000. In 2013, the claimant issued a claim against GFS that GFS was negligent and had failed to advise him on a potential claim against AF and applicable limitation periods. The claimant alleged that but for GFS’s negligence, he would have issued a claim against AF in 2008 and would have received substantial damages.
The claimant relied on the earlier case of Credit Lyonnais SA v Russell Jones & Walker  EWHC 1310 where it was held that a professional may owe a duty to give advice outside the scope of a retainer if, in the course of performing the retainer, the professional comes upon information which would lead any competent professional to perceive and advise upon a legal risk. It was emphasised that although a solicitor was under no general obligation to expend time and effort upon issues outside the scope of the retainer if, in the course of doing that for which the solicitor was retained, he became aware of a risk or potential risk it was his duty to inform the client. If in the course of performing his instructions within his area of competence a lawyer noticed or ought to have noticed a problem or risk for the client, which it was reasonable to assume the client did not know about, the lawyer was required to warn the client.
The court distinguished this case from that of Credit Lyonnais based on the fact that GFS was instructed to advise upon the claimant’s present and future financial requirements – the retainer was prospective. The information on the earlier transfer was provided for history and context only and no fees was to be paid to GFS to review the previous advice. There was no commercial or factual connection between the earlier transfer and the advice that GFS was asked to give. Further, the nature of the advice which it was argued GFS should have provided was in any event different in its nature to that which was the subject matter of the retainer. Based on these facts, Green J held that GFS owed no duty to advise on the possibility of a claim against AF and the claim had no real prospect of success.
It is a relief to professionals that an extended duty to advise will only arise in “obvious cases”, and that there must be a “close and strong nexus” between the retainer and the matter on which it is said that the professional should have advised but failed to do so. This implies that if a client receiving professional advice wishes for any specific advice that is not covered in a retainer, then it should be discussed with the professional and the retainer amended accordingly. It is also a reminder of the importance of setting out the scope of work clearly in the retainer and if relevant, also specifying that there will be no review of past advice and that they will not consider on whether a client should complain about past advice.