Walsh v Greystone Financial Services Ltd  EWHC 2573 (Ch)
This is a significant decision in relation to termination of a Solicitor’s retainer. The background is very familiar. The client wanted to instruct new solicitors in relation to an appeal following dismissal of the original claim. Mr Walsh instructed Firm 2, to advise on the merits of an appeal. Firm 1 had a lien over the files for unpaid fees and refused to hand them over. Most solicitors been there.
Firm 1 then sent a 7-day notice to Mr Walsh, to terminate the retainer. They also sent a Notice of Change which they invited him to sign and return the following day. They threatened him with costs if they had to apply to come off the record. On that following day Firm 2 sent the signed Notice of Change. Firm 1 refused to send the papers, despite an undertaking. The court had to decide who ended the retainer as this would affect any decision on ordering Firm 1 to deliver the papers.
Mr Justice Nugee referred to the 2019 White Book 42.2.5 –
“Where a client discharges a solicitor, the court has no power to call upon the solicitor to hand over documents because the solicitor’s lien to retain those documents endures. However, where the solicitor discharges themselves in the course of an action, their possessory lien over the documents becomes subject to the practice of the court under which the court will ordinarily order the documents to be handed over to the new solicitor against an undertaking by the new solicitor to preserve the former solicitor’s lien, though in exceptional circumstances, the court may be justified in imposing terms.”
He also referred to previous decision that supported this view including the 1837 case of Heslop v Metcalf where Templeton LJ said –
“Where the solicitor has himself discharged his retainer, the court then will normally make a mandatory order obliging the original solicitor to hand over the client’s papers to a new solicitor against an undertaking by the new solicitor to preserve the lien of the original solicitor.”
Firm 1 said that Mr Walsh had terminated the retainer by way of the Notice of Change and so the court had no power to call upon them to hand over the papers. The High Court rejected this. They had in effect forced his hand by threatening action if he did not sign the Notice. The court should look at the substance of what happened. Firm 1 had left Mr Walsh no real choice. The effect was that they had therefore been the ones to terminate the retainer. He ordered them to hand over certain documents which enabled Firm 2 to advise on appeal.
This was an attempt by Firm 1 to avoid the requirement to hand over papers by pressing the client to terminate the retainer. Their lien for unpaid costs remained intact but they had to hand over certain papers to allow Firm 2 to advise.