A recent Commercial Court case considered a solicitor's duty to advise on a client's prospects in litigation. In liability terms, the duty is two-fold: to formulate a non-negligent view on the merits and to convey this view properly to the client. The case also demonstrated that, if negligent, a solicitor will not be liable if the client would not have acted differently even if properly advised.

A Baltic telecoms group, Levicom, instructed Linklaters to act in a contractual dispute with a Swedish telecoms group in 2000. Linklaters advised on settlement proposals as well as the merits of Levicom's case more generally in early 2001. On Linklaters' advice, no settlement was agreed and arbitration proceedings were commenced, which were eventually settled on terms unsatisfactory to the client in June 2004. Levicom sued Linklaters, alleging that it had given over-optimistic advice on the prospects of its case in two letters in January 2001 and March 2001, and that it had negligently failed to obtain Leading Counsel's advice on the merits at an appropriately early stage.

The court found:

  • Linklaters was not negligent for failing to seek Leading Counsel's advice on the merits at an earlier stage.
  • The experience and nature of the client is relevant to the scope and discharge of a solicitor's duty. Levicom was a sophisticated client and there is no duty upon a solicitor to warn such a client that a court or arbitrator might not accept its particular interpretation or construction of a contract.
  • A solicitor's duty to advise its client is two-fold: first, to formulate a non-negligent view; and secondly, to convey that view properly to the client.
  • Taking the first limb, a solicitor's view is not negligent so long as it falls within the range of opinions that a reasonably competent solicitor could form. Although Linklaters' advice on Levicom's prospects of success was robust and more optimistic than a more cautious solicitor might have given, it was not so over-optimistic as to be beyond the range of reasonable views. Accordingly, it was not a negligent view.
  • Taking the second limb, a solicitor must properly convey to its client its view and bring to the client's attention the potential difficulties in its case. Although Linklaters had taken a robust view in respect of breach of contract by the Swedish group, it had identified that the potential remedies available to Levicom, including a claim for damages, were far from certain. The court found that the firm failed properly to bring these difficulties to Levicom's attention and that this was negligent.
  • However, although Linklaters' advice was in some respects negligent, Levicom would not have done anything differently had it received "proper advice", i.e. this would not have affected its approach to negotiations and settlement of the dispute. It was again relevant that Levicom's directors were experienced businessmen who had formed strong views on the case before they instructed Linklaters.
  • It follows that Levicom was entitled to nominal damages only.

Comment

Levicom's directors held strong views on the merits of their case and, in broad terms, Linklaters concurred with them on the issue of breach of contract. However, the client's strong opinion meant that, in order to discharge its duty, it was important for Linklaters expressly to state in what respects it disagreed with its client on the remedies available or flowing from the breach. Linklaters correctly identified the difficulties by the time of its second written advice in March 2001. However, by failing to say specifically that its view had changed from that expressed in its previous written advice in January 2001 and by failing to highlight the difficulties in March 2001, Linklaters was held not to have properly conveyed its advice to the client.

The case demonstrates that a solicitor can take a robust view, so long as it does not fall outside the range of opinions that a reasonably competent solicitor could have arrived at. A solicitor must, however, also communicate his advice properly to the client, highlighting any potential difficulties and correcting the client where he knows that it has a strong view on a particular aspect with which the solicitor disagrees. A failure to do so may lead to recriminations later if a matter turns sour. Although Linklaters was not at fault in failing to obtain Leading Counsel's advice at the outset, solicitors should not shy away from advising a client to obtain a QC's opinion in appropriate circumstances. Clearly by doing so, a solicitor reduces the chances of him facing a claim that his advice was negligent.

Further reading: (1) Levicom International Holdings BV (2) Levicom Investments Curacao NV –v- Linklaters (A Firm) [2009] EWHC 812 (Comm)

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 16/06/2009.