File disclosure when fees are owed

The High Court recently confirmed that a firm of solicitors cannot refuse to disclose its file of papers if a former client brings a professional negligence claim against the firm, even if that client owes fees to the solicitor and the solicitor asserts a ‘lien’ over the file. In Ellis v John Hodge Solicitors, the court decided that solicitors cannot rely on their lien to avoid disclosing their file of papers as part of its obligations in a professional negligence action. 

Parties in litigation have strict disclosure obligations governed by various parts of the Civil Procedure Rules, depending on the complexity and value of a case. At the initial stage, the solicitors in this case were required to provide disclosure but claimed they could not comply with their obligations because they were exercising a lien over Mr Ellis’s file of papers due to unpaid fees.

Both sides agreed that the contents of the file were relevant to the issues in the case, and in normal circumstances there would be no question that the solicitors should disclose the file unconditionally. However, because they were owed fees by Ellis, they offered to disclose the file to Ellis’s solicitors on a conditional basis: they required the solicitors representing Ellis to agree not to share its contents with him. Ellis argued that John Hodge Solicitors were required by the CPR to disclose the file regardless of whether they were owed fees.

The court decided in this case that having a lien over a client’s file of papers does not mean the solicitors are not required to disclose the file in professional negligence proceedings. However, the court can choose to either allow or refuse to allow inspection of the file by the other party in circumstances where the solicitors have a lien over it.

In reaching this decision, the court set out a number of factors which must be taken into consideration, including which is more disadvantageous: the disadvantage caused to the claimant if they were prevented from seeing the file, or the disadvantage caused to the solicitors if disclosure is ordered (as the value of the lien will be affected if the claimant obtains the file).  

The court decided the file should be disclosed in this case without measures to prevent Ellis from seeing the contents. The judge came to this decision on the basis that Ellis would not have been able to properly proceed with his claim (and defend the solicitors’ counterclaim for unpaid fees) without seeing the file. The judge also considered the lien would lose its value even if Ellis did not see the contents of the file because he would still be told about the contents by his solicitor acting for him in the professional negligence claim.

Cases that may warrant disclosure of a solicitors’ file on a limited basis are likely to be those involving issues of national security or issues of privilege, and the judge said these would be ‘exceptional’ cases. He did not consider this case to be exceptional for that purpose.

This case sets out key points about solicitors attempting to limit or prevent the disclosure of their file of papers while fees remain outstanding. That will only be allowed in certain circumstances. Where the file of papers is unrelated to the litigation in which it is required to be disclosed – as would be the case with professional negligence claims – it is unlikely solicitors will be able to circumvent their disclosure obligations under the CPR unless in very exceptional circumstances – of which unpaid fees is not one.

Gemma Symons is an associate in the professional negligence team at Myerson