Solicitors’ PI: scope of a fixed fee retainer

In a recent case the Court has considered the scope of duty owed by a solicitor retained on a fixed fee retainer.

For an agreed fee of £500, a firm of solicitors was instructed to “look over” intellectual property agreements and to discuss “certain key issues”. The Court found the solicitors were not required to make enquiries about the ownership of the IP rights: this was not within the scope of the retainer. However, the solicitors were negligent in failing to ensure that the relevant clause dealing with the sale of IP rights extended to licensing in addition to sale. The Court said that this was not a matter on which the solicitors required instructions; the antennae of any commercial lawyer, especially one claiming expertise in IP law, should have been alert to the issue, almost without thought. The Court also said that where solicitors undertook work for a specific fee, they are generally speaking obliged to complete the work to the ordinary standard of care, even if it becomes unremunerative to do so.

The case illustrates the risks associated with fixed fee retainers. It shows that if a fixed fee retainer is agreed then a solicitor should be careful to:

•Send the client a clear retainer letter, setting out the scope of the retainer and excluding liability for advice beyond the scope of the retainer.
•Calculate fees only when full information has been provided (the solicitors agreed the fee of £500 before seeing the agreements in question).
•Ensure that the advice given for the fixed fee is the same advice that would have been given had the work been undertaken on an hourly basis.
•Ensure that advice that is of importance and readily apparent to a lawyer in that specialism is given, potentially even if it falls outside the scope of the retainer.

This article first appeared in Law-Now, CMS Cameron McKenna's free online information service, and has been reproduced with their permission. For more information about Law-Now, please go to http://www.law-now.com/law-now/.