The importance of correctly wording retainers

The case of Blacklion Law LLP v Amira Nature Foods Limited & Anor [2022] EWHC 1500 (Ch) demonstrates the dangers of any ambiguity in the retainer and serves as a warning to ensure the wording of your retainer is clear and concise.

By way of background, Blacklion Law LLP brought an action against a former client for breach of contract on a proposed bond issue, known as Project Avatar.

The main issue relates to the construction of the Avatar retainer, and whether the payment obligation was conditional on the bond issue completing.  The retainer provided that the firm would charge the company a fixed fee of £300,000.00 … for the services plus disbursements … in connection with this matter, subject to the completion of the matter by 31 May 2017.

Blacklion Law LLP submitted that the if the bond issue completed by 31 May 2017, they would receive the fixed fee.  If it did not complete on time, they would still receive the fixed fee, and services provided after this date would be charged separately.

Amira Nature Foods Limited submitted that terminology of the retainer provided a contingent fee arrangement and if the bond issue did not complete by the specified date, no costs would be payable.

The Court found the wording of the retainer to be ambiguous.

The parties also raised issue with entitlement to interest and HHJ Matthews was asked to consider contractual interest on any debt found due.

The retainer as signed by both parties provides for contractual interest on unpaid invoices.  The Claimant sought interest on its claimed debt at the rate shown in its standard Terms of Business.  Clause 35 of those terms provides for interest at 1.5% per month from 30 days after the date of the unpaid invoice.  The Avatar retainer did not refer to the Terms of Business but the general retainer did refer to those Terms.  Importantly, the general retainer detailed that the Terms ‘apply to all the services which we provide to you as our client’.  Clause 1 of the Terms of Business confirm the Terms will apply to all dealings unless supplemented or varied by other Terms of Business issued, otherwise varied in writing. It was the Claimant’s case that the Terms of Business, and in particular Clause 35, applied to the work carried out under the Avatar Retainer as well as under the contractual retainer.

Consideration was given to the SRA Code of Conduct 2011 (replaced in 2019) and the information provided to the Client.  In judgment HHJ Matthews held that the contractual interest provisions of Clause 35 of the Terms of Business applied to the invoices rendered under the Avatar Retainer just as they did to those rendered under the general retainer.  The Claimant was therefore entitled to charge contractual interest on unpaid fees.

The Court found that the fixed fee of £300,000.00 for work done by 31 May 2017 was a debt payable by Amira Nature Foods Limited, together with contractual interest at the rate of 1.5% per month from 30 days after the date of the invoices rendered in respect of the fixed fee.  Payable within 14 days from hand down of the judgment.

This case highlights the importance of ensuring the wording on your retainer is water tight so there can be no ambiguity and no costly disputes regarding entitlement to monies owed.  This case also highlights the need to make prompt payments to reduce the level of interest owed.

If you have any questions regarding this summary, please do not hesitate to contact Emma Robson here.

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