Disclosure of solicitors’ files in professional negligence claims

The High Court in Ellis v John Hodge Solicitors has held that the defendant firm of solicitors could not rely on a lien over its file to avoid disclosure obligations in a subsequent professional negligence claim. The judgment fills a “striking” gap in existing case law and considers existing principles in the context of the current court disclosure rules (the Disclosure Pilot Scheme, soon to be replaced in similar terms by Practice Direction 57AD).

The background - defendant solicitors' refusal to disclose client files 

The claimant, Mr Ellis, instructed John Hodge Solicitors (“JHS”) in respect of a personal injury claim following an incident in 2014 (the “Underlying Claim”). Mr Ellis sought compensation in excess of £500,000. The defendant in the Underlying Claim made a series of offers - including one at £200,000 - each of which was rejected by Mr Ellis. At trial, Mr Ellis was awarded damages of the much lower £11,813.63.

Mr Ellis subsequently issued a professional negligence claim against JHS alleging that JHS had failed to advise on:

1. the effect of the offers, and
2. the risk that the Court may prefer the defendant’s expert evidence in respect of causation. 

The parties were expected – in accordance with the Disclosure Pilot Scheme – to provide initial disclosure alongside their statements of case. JHS, however, considered that compliance with the Disclosure Pilot Scheme would not be possible owing to its exercise of a lien over the file relating to the Underlying Claim on the basis of unpaid fees.

The issue in dispute - could the solicitors' disclosure obligations be narrowed?

There was some agreement between the parties, including:

• the retainer between Mr Ellis and JHS had been terminated by mutual agreement following the resolution of the Underlying Claim and that a portion of JHS’ legal fees remained unpaid,
• JHS' file on the Underlying Claim contained key documents on which JHS relied and “material which is properly needed for [Mr Ellis] to know whether his case, as pleaded, could be maintained”. The file would undoubtedly be caught by the Disclosure Pilot Scheme.

Where the parties differed was whether the lien could narrow JHS’ disclosure obligations:

• JHS contended that unpaid fees clearly gave rise to a lien which entitled JHS to withhold the file. JHS was, however, prepared to disclose the file to Mr Ellis’ new solicitors subject to an undertaking that the file would not be shared with Mr Ellis and would be returned once its contents had been reviewed.
• In contrast, Mr Ellis contended that the file was not requested by him personally, but was required because of disclosure obligations imposed by the Disclosure Pilot Scheme; the lien should have no application in this context.

The decision - when can solicitors use a lien to prevent disclosure of documents? 

A lien gives a solicitor the right to retain client documents and/or property until all outstanding fees are paid.

A lien does not automatically render a document immune from disclosure. The Court is permitted – as a matter of discretion – to allow or decline inspection of a document subject to a lien. When doing so, the Court should have regard to:

• when and why the retainer ended, and which party ended it;
• the nature of the case (including the stage at which the litigation had reached);
• the conduct of the solicitor and the client respectively; and
• the “balance of hardship” which might arise from the Court’s decision (by weighing up the disadvantage to the client if deprived of material relevant to the dispute, against the reduction in value of the lien if the file is handed over).

Cases concerning the scope and exercise of a solicitor’s lien have been heard by the Courts before – notable cases include Robins v Goldingham [1872] LR 13 Eq 440 (approved by the decision in Evelyn Donaghy v JJ Haughey Solicitors Ltd [2019] NI Ch 1). Those cases, however, focus on scenarios where the lien is exercised over a file that is the same litigation as that which the original solicitor had been retained or related to the original litigation (for example, enforcement of an existing order). That is to be contrasted with the JHS file which concerned a different cause of action (the Underlying Claim) and named a different defendant.

Whilst the existing cases were of general “assistance”, HHJ Pearce concluded that JHS’ file should be disclosed without the need for an undertaking. 

When coming to his decision, HHJ Pearce highlighted:

• How crucial the contents of JHS’ file was to the current claim. Not only would the contents of the file evidence whether JHS did advise Mr Ellis on the effects of rejecting settlement offers relating to the Underlying Claim, but JHS had entered a counterclaim for the value of their fees. Mr Ellis would therefore be unable to properly proceed with his claim (and defence to the counterclaim) without sight of the file.  
• JHS’ suggested undertaking was unrealistic. HHJ Pearce considered that the lien would lose its value regardless of whether Mr Ellis was told the contents of the documents by his new solicitor (as envisaged by the undertaking) or saw the documents himself. Moreover, the requirement to return the file at the end of the case would provide JHS with no more protection than was already provided for under Rule 31.22 of the Civil Procedure Rules (which prevents the use of documents for any purpose other than in the proceedings in which they are disclosed). There was no need for duplication. 
• Undertakings limiting disclosure are typically used in “exceptional cases relating to issues such as national security or certain claims of privilege”. The current case involved neither, and JHS failed to persuade the judge that the security given by the lien would render this case “exceptional”.

Key takeaways

The judgment is another in a line of case law that suggests that a solicitor’s ability to rely on a lien may be restricted in certain circumstances. It also adds a new scenario to that list – where the lien conflicts with the solicitor’s disclosure obligations and/or is being exercised in respect of a file that is unrelated to the current claim. The risk of disclosure is perhaps heightened where – as was the case here – a client brings a professional negligence claim for acts or omissions in a previous matter because the matters will rarely be the same or related litigation.

It also serves as a reminder that the Court is generally reluctant to modify parties’ disclosure obligations, particularly where the Civil Procedure Rules (and accompanying Practice Directions) provide prescriptive instructions and exceptions.

Written by Olivia Pointon, Solicitor, and Katy Dixon, Trainee Solicitor, in Burges Salmon Dispute Resolution team.

This is a useful judgment for those wanting to bring a professional negligence claim - what documents do they need to prove their case and can they obtain them?