Who owns what? File Ownership and liens.
The number of cases where solicitors acting in litigation find themselves at odds with clients over issues such as costs is undoubtedly on the increase. A number of decisions have recently emerged in relation to attempts to question fees charged by claimant personal injury firms where, post-LASPO, the success fee and insurance costs were taken from the clients’ damages rather than having been paid by the insurers as was previously the case. All such claims depend upon the claimant being able to obtain or re-constitute the original file.
The two questions, who owns the file and can a lien be exercised, though separate are clearly linked since a lien would not need to arise unless there was an implication of ownership on the part of the client. But what is it that is actually owned by the client and what in fact belongs to the solicitor anyway.
So far as liens are concerned, it has long been the case that solicitors are entitled to a lien over a client’s file or papers as a means of securing the payment of their costs and disbursements and is a remedy that has long been upheld by the courts.
The related issue of who owns the solicitor’s file and whether the client or their new representatives are entitled to demand that it be handed over to them anyway is one that has also been tested in the courts on many occasions.
Despite the ubiquity of both types of case, and given how frequently such disputes emerged, there was for a long time little in the way of definitive professional guidance on the ownership of files or the application of the solicitors’ lien. The SRA, who previously offered brief guidance in the 1999 8th edition of the Guide to the Professional Conduct of Solicitors, removed that guidance when the 2007 Code of Conduct came along, and it was not until March 2017 that the Law Society’s guidance – recently updated to incorporate reference to the General Data Protection Regulation (GDPR) – provided some long overdue guidance on ownership of the file. That, however, is open only to those who have a Law Society account and so is not generally available.
Ownership of the file
There is, it has to be said, no shortage of case law, some of it dating back to the mid-19th century, on the ownership of the file. The general thrust of cases such as Re Thompson 1855 and Re Wheatcroft 1877 was that:
- copy letters created on the file by the solicitor belonged to them so would not be ordered to be handed over to the client;
- copy letters written by the solicitor to the client also belonged to the adviser and so could be retained by them; but that
- letters received from third parties by the solicitor on the client’s behalf had been received as the client’s agent and would therefore belong to the client.
In relation to those items of correspondence which belong to the adviser, there are then further issues as to whether the client is therefore entitled to copies to be made of them at their reasonable expense. In the various cases now being reported, one of the main issues receiving attention is whether the client is entitled to receive a copy of their conditional fee agreement so as to be able to reopen the issue of fees paid and question a final bill under the provisions of Part III of the Solicitors Act 1974.
The 1999 “Guide to the Professional Conduct of Solicitors” dealt with the issue of client’s papers and property in Chapter 12 – at Principle 12.13 – which provided that “on termination of a retainer a solicitor should, subject to any lien, ….. deliver to the client all papers and property to which the client is entitled, or otherwise hold them to the client’s order” and went on to make provision for informing the client of how papers were going to be dealt with, what should happen when there were joint clients, charging when a request for a file was made and responding to requests for a file where matters were still ongoing. Chapter 12 went on to provide further guidance, at Annex 12A, relating to the ownership, storage and destruction of documents. Given the usefulness of this guidance (subject to the caveats that elements no longer apply and should be used with care) it is a shame that it is not available electronically – however copies can still be purchased on web sites such as Amazon and AbeBooks (www.abebooks.co.uk) .
In a nutshell, Annex 12A states:
- documents prepared by the adviser for the client which were paid for by the client belong to them, and so would include most attendance notes, drafts, copy letters received by the firm on the client’s behalf and copy letters prepared by the adviser for third parties on the client’s behalf;
- internal documents, such as notes of research, internal communications, diary entries but (rather curiously) “the preparation of which is not regarded as an item chargeable against the client” belong to the firm;
- although documents sent to the adviser by the client during the retainer become the firm’s property, documents prepared by a third party and received by the firm will belong to the client.
This view has been reflected by the Law Society in its practice note on this topic (updated in May 2018) from which we cannot quote due to the restricted access of this document.
To summarise, however, the position appears to be (unless there is an expressed intention to the contrary) as follows:
- documents received by the firm from the client, or from a third party as agent for the client, belong to the client
- the final versions of documents produced by the firm as part of the retainer, or by a third party during the retainer at the client’s expense, belong to the client
- documents intended for the benefit or protection of the firm, or as a by-product of the instructions, and produced by the firm belong to the firm,
- copies (including emails and correspondence) produced during the retainer belong to the firm,
- correspondence from the client to the firm belongs to the firm,
- accounting records belong to the firm,
Note that there is now no distinction between hard copy and electronic documents (something not envisaged by the 1999 Guide).
A further issue not considered by the 1999 Guide is the question of what can be retained by the firm and disclosed in the light of the GDPR. Firms should, therefore, be sure that clients are aware of what personal data the firm is retaining and how and for how long it is being retained and should also exercise care in what is disclosed following a Subject Access Request (see earlier article on this website relating to the requirements of GDPR).
There is no doubt that this is a developing area of practice and the extent to which the courts might decide that papers should be provided to clients in the future is far from certain. To date, the position appears to be as it has always been. In Hanley v J C &A Solicitors Ltd  EWHC B28 (Costs), Master James expressed clear concerns about a possible floodgate of such claims being brought to court if copies of the solicitors’ documents were always to be ordered to be made available, and also expressed the opinion that “there is currently no [binding] case in which the Solicitors have been Ordered to hand over papers over which they (rather than the Clients) have proprietorial rights” (para 57).
However, this may not always be the view and it is suggested that to the extent that this issue might cause future problems, firms might wish to consider setting out in their terms of business what their policy will be in relation to any future requests for files to be provided to clients after the end of the retainer and, in particular, which items will not be made available and what costs might be charged for checking the file and copying those items that will be made available.
A solicitors’ lien
Next we turn to look at the separate, although related, topic of the solicitors’ lien.
At its simplest, a lien is a right which a solicitor can exercise to keep a client’s property (for example papers, files, documents and deeds that belong to the client and that the solicitor has received while representing the client) until such time as the client has paid the solicitor’s fees and disbursements. Unless it has been agreed to the contrary, a lien can be exercised at any time if the solicitor’s bill has not been paid. It is a right that can be traced back to Roman Law and the doctrine of locatio operas faciendi and the concept of a contract for services allied to a bailment of the article upon which the services were to be performed. (Note also that a solicitor can also exercise a lien over money that the solicitor is holding on behalf of a client. Indeed, the issues relating to financial liens are continuing to be tested in the courts as the recent case of Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited  UKSC 21 demonstrates. However, that is outside of the scope of this article.)
In reality, liens are more complex than this and Halsbury lists several different types including legal liens, non-possessory liens, equitable liens, statutory liens, contractual liens and subrogatory liens.
The lien with which we are concerned here is the general lien; the right at common law, as Halsbury expresses it, “to retain goods for which charges have been incurred until those charges are paid.
There are no references to a solicitor’s lien in the current SRA Code of Conduct 2011 – although the 2007 did require at Rule 2.03(1)(e) that a solicitor should “advise the client that there are circumstances where you may be entitled to exercise a lien for unpaid costs” and principle 12.14 in Chapter 12 of the 1999 Guide to the professional Conduct of Solicitors went further and actually made it clear that “it is not unprofessional for a solicitor to retain papers and property belonging to the client, pending payment of professional costs owed by that client”. So far as the current Code of Conduct is concerned, it could probably be argued that Outcome O (1.13) which requires that “clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter” possibly covers the position of the firm exercising a lien.
A number of issues arise in relation to the exercise of the lien.
The first of these is in relation to the position of where a solicitor, exercising a lien in relation to for example an ongoing matter, receives a request from another successor solicitor for the file of papers to be handed over. The advice given in the 1999 guide is that in such cases, the solicitor exercising the lien should handover the papers subject to a satisfactory undertaking being given by the successor solicitor as to outstanding costs. The view taken in the 1999 guide was that there was no duty upon the solicitor exercising the lien to accept such an undertaking.
The second issue that arises is in relation data protection and whether a solicitor can refuse to answer subject access requests because they can claim a lien over an individual’s legal file. The position under the Data Protection Act 1998 was that the Act took precedence over the lien. Section 27(5) stated “Except as provided by this Part, the subject information provisions shall have effect notwithstanding any enactment or rule of law prohibiting or restricting the disclosure, or authorising the withholding, of information.” Thus, if the information in question was held in in a form caught by the DPA then the DPA took precedence over the practice of withholding the information until the fees are settled.
The GDPR does not specifically refer to the impact of a line on subject access requests. It does, however, provide at Article 62 a number of exceptions to the obligation to provide information – and liens are not listed among them. It should, therefore, be assumed (until a decision to the contrary is made) that a lien does not override the duty to provide information following a subject access request.
Do bear in mind, however, that a subject access request under Article 13 of the GDPR is a request to see personal data as opposed to a right to see copies of documents containing personal data. Whilst the simplest way to provide certain forms of data may be simply to send the person making the request a copy of the document containing that data, there is no obligation upon the holder of the data to do so. As a result, therefore, it might be possible for the solicitor exercising a lien simply to summarise the information whilst still retaining the actual documents themselves.
The third issue that arises is in relation to the position where a barrister holds papers in a matter and the client , the barrister’s instructing solicitor have fallen out and the solicitor is exercising a lien over the client’s papers. In the circumstances where the client has instructed another solicitor and that solicitor wants the original barrister to continue to act, can the barrister rely on the papers he still holds notwithstanding the lien? The guidance given by the Bar Council is May 2017 is that the barrister should ask the first solicitor whether they wish to exercise a lien over the papers. If they do not then they may use the papers, if they do then the papers should be returned to the first solicitor without copying or using them. This would not apply, however, to any notes that the barrister had made.
The next point is, it is important to bear in mind in relation to the exercise of the lien is that the right is only for the solicitor to hold the papers or file pending payment of costs and that the solicitor cannot have a better right to the papers than the client themselves would have had. In relation to the first of these two points, it is, as the 1999 Guide defined it “passive in nature and does not entitle the solicitor to sell or dispose of the client’s property”. It is a personal right that cannot be assigned (although it is suggested that the personal representative of a deceased solicitor may be able to continue to exercise the right). So far as the second point is concerned, the solicitor cannot rely upon the lien as against a third party if that third party has a better right to the papers than the client, if the property or papers are held in trust for a third party or where the solicitor did not have the right to accept the papers from the client in the first place.
Three final points:
- it is suggested that whilst a lien need not come to an end simply because the debt to which it relates can no longer be enforced as a result of the limitation period, a lien cannot be exercised over a debt which has already ceased to be actionable;
- a court has the power to order a solicitor to deliver up a client’s papers notwithstanding the existence of a lien (see s68 of the Solicitors Act 1974); and
- notwithstanding the existence of a lien, it is argued that the SRA would still have powers to require a solicitor to deliver documents and assets under Schedule 1 of the Solicitors Act 1974.