The scope of the duty of care owed by solicitors to clients is variable. It is not easy to describe it in the abstract; it is much easier to explain by reference to examples that illustrate the practical operation of the principles that apply.
The decision in Stone Heritage Developments Ltd v
It is established law that solicitors cannot travel outside their instructions and make investigations that are not expressly or impliedly requested by their clients. They do however have a duty to warn clients of any potential risks or hidden pitfalls that come to their attention when acting for them.
The trial judge thought that the solicitor should have explained the less obvious pitfalls to his clients in this case, and ruled that the solicitor was unable to rely upon the warnings given against the premature conclusion of the development agreement because they did not encompass the difficulties that the solicitor should have foreseen – and which, in fact, arose.
The Court of Appeal took a different view. It said that the starting point was to ascertain what the solicitor had been instructed to do. The developer had expressly instructed him to assume that the development would take place on land vested in the landowner that was granting it a licence to build. The individuals with whom the solicitor was dealing had accountancy and property development experience and had required him to play only a very limited role, which was made clear by the way in which they dealt with him. They failed to provide him with material documents and incorporated a company to carry out the development without telling him. They ignored his advice and suggestions, and he was entitled to take the limitations on his role at face value.
The decision is helpful, but the courts will decide each case on its own merits and the outcome will depend upon the matrix of facts and instructions given. It may also depend upon the characteristics of the client; a young client, inexperienced in business, may require legal and commercial advice that it would be inappropriate to offer an experienced businessman.
Professionals can guard against negligence claims by setting out in writing for clients precisely what they will and will not do, and any timeframe within which the work will be done. It is also vitally important to recognise and agree any changes in the scope of the retainer, before undertaking any additional work for which the client has not agreed to pay.
Allyson Colby is a property law consultant