Can’t Pay? We’ll Take It Away: Can Firms Exert a Lien Over Disclosable Files?

Published 24 November 2022

John Hodge Solicitors acted on behalf of Mr David Ellis after an injury suffered from an accident at a restaurant in 2014. The personal injury claim centred on whether the chronic pain and psychological symptoms experienced by Mr Ellis were caused by the accident itself and whether the injuries were as severe as asserted. The defendant restaurant made an offer to settle of £200,000 which was rejected on the basis that Mr Ellis was seeking damages in excess of £500,000. Ultimately, the claim went to trial in July 2018 and Mr Ellis was awarded damages of only £11,813.63.

Mr Ellis (the “Claimant”) subsequently commenced proceedings against John Hodge Solicitors (the “Defendant”) for professional negligence in failing to properly advise him as to the effect of the offers made by the defendant restaurant.

The claim was issued in the Business and Property Courts and was, therefore, subject to the rules of the Disclosure Pilot and Practice Direction 51U which required Initial Disclosure to be provided at the same time as serving statements of case.

The Claimant considered that advice provided by the Defendant had been negligent and had, therefore, refused to pay the fees billed to him by the firm. As a result, the Defendant asserted in its Defence that it would be unable to provide Initial Disclosure on the basis that it was exercising a lien over Mr Ellis’ file for the unpaid fees. The Defendant relied on the principle established over 200 years ago in Robins v Goldingham [1872] in seeking an undertaking from the Claimant’s solicitors which provided that if they were provided with the file, they would not disclose it to the Claimant and that the documents would be returned to the Defendant once the documents had been considered. The Defendant also maintained that this did not prejudice the Claimant’s case as he had sufficient information to prepare Particulars of Claim.

The issues were heard before HHJ Pearce who considered whether the Defendant’s common law rights to a lien in respect of the unpaid costs could be used to override the Civil Procedure Rules in respect of disclosure. The Court also considered whether or not it should exercise its discretion to allow the Defendant to withhold the Claimant’s file. HHJ Pearce considered the decision in Woodworth v Conroy [1976]. Consequently, and based on the principles established in Woodworth, he considered the fact specific circumstances surrounding the termination of the client/solicitor relationship, the stage of the subsequent litigation and the parties’ conduct.

Whilst HHJ Pearce acknowledged that the Court has the discretion to decline making an order for the Defendant to provide the documents subject to the lien, the documents in the file were highly relevant to the professional negligence claim and, therefore, the case could not be tried properly without disclosure. Moreover, the Court refused to require the Claimant’s solicitors to provide the requested Robins undertaking. It was found that such an undertaking was not practicable since that the Claimant’s solicitors would have to report to him on the contents of the file. Moreover, the documents would likely have been copied and, therefore, would lose the Defendant’s desired leverage.

The decision reiterates the efficacy of the principles established in Woolworth whilst also setting out that the decision will ultimately be based on the facts at hand and the discretion of the Court. HHJ Pearce recognised that the Court can modify the disclosure duties under the CPR although the circumstances in which it is likely to do so are difficult to foresee. He was, moreover, critical of undertakings that would restrict the use of disclosure beyond those restrictions already set out in the CPR.

It will be interesting to see how the rules on disclosure develop subsequent to this decision and the more recent decision in Fortimat Properties SA v Pinsent Masons LLP  [2022] EWHC 2411 (Comm) which saw Mr Justice Jacobs rule that, in spite of privilege rules, where cases proceed to trial, it is “quite impossible” to sustain privilege in professional negligence claims where the privileged documents are also those being relied upon and are, therefore, critical to proceedings. The Court again ordered the disclosure of the documents in question.

We will continue to monitor the position whereby the courts are currently applying a pragmatic approach to ensure that relevant documents are before the trial judge or a case cannot be properly heard without them.