Drawing a retainer to an end can be a minefield

One of the indicators of a strong compliance culture within a firm is how matters are handled at the tail end of the retainer however; I am not simply referring to the storage arrangements which are in place.

While most firms understand the importance of setting the scene correctly when accepting instructions, particularly with clients who are new to the firm, ways in which to draw the retainer to an end are sometimes more haphazard. An orderly closure system at the end of the matter is a useful investment of your time.

Post-retainer expectations

It may seem obvious to lawyers, but some clients are not so clear about when the relationship has finished and why, and what they can expect from the firm thereafter.

A retainer will usually come to an end in the following circumstances:

• Because outcome (1.3) of the SRA Code of Conduct cannot be achieved: "when deciding whether to act, or terminate your instructions, you comply with the law and the Code". This may be because you cannot be satisfied that third party instructions are the instructions of the client, or because you believe that instructions are given under duress or undue influence, or the client loses the capacity to give you instructions.

• Because the retainer has naturally come to an end as its purpose has been achieved or proves not to be achievable. It is always a good idea to document that the client has been told that this is the case.

• Because the client terminates the retainer.

In conduct, what the client can expect after this point is that their affairs will be kept confidential in accordance with the outcomes in chapter 4 of the SRA Code. Unfortunately, some clients, and some fee earners, assume more than this. For example, believe that the firm will never act against their interests or that they will be kept updated about matters which may have an impact on them or the work which the firm was retained to perform.

Such misunderstandings can create a number of issues, not only in terms of the time spent addressing complaints from former clients, but also because of the adverse publicity that may be generated, however unwarranted this may be.

Housekeeping principles

To address these issues, the COLP and COFA will see benefits in rolling out some good housekeeping principles in order to ensure that client care and effective communication strategies are applied to this end of the retainer. This could include the following:

• Requiring the fee earner to communicate with the client about the fact that the current retainer is at an end, and the reasons why this is the case, and for this communication to be recorded on the file.

• To advise the client of the firm's ongoing duty to them; whether this is simply to keep matters confidential or, if a commercial agreement has been reached, that the firm will keep the client updated about matters which are material to them, or that they have agreed not to act against their interests, as the case may be.

This can be incorporated into the firm's systems and procedures by the following methods:

• Adopting a file closure process in much the same way as client inception checklists.

• Appropriate training of all colleagues involved in the closing process as to both regulatory duties and the firm's process.

• Imposing an obligation to include evidence that the process has been used on the file, or elsewhere.

• Checking mechanisms in the supervisory and file review processes.

• Ensuring that all commercial agreements are recorded in such a way to avoid the embarrassment of the firm acting in a contradictory manner.

These systems can also deal with other closure risks such as failing to account to clients for balances held on client account, checking for paperwork which should be returned to the client, and providing information about storage arrangements.

Rolling retainers

An added complication may arise where clients have what can be described as a rolling retainer with the firm, perhaps because they have an agreement that the firm will deal with all their employment and business matters over a fixed period of time. The clarity of the solicitor's position, and the "switch on - switch off" application of some of the conduct duties, is altered in these circumstances. If such a retainer exists then the client can expect you to demonstrate ongoing duties such as to check for client and own interest conflict scenarios, (because they are a current client of the firm and these types of conflict of interest are fixed on current clients only), and also for you to be satisfied that the confidentiality and disclosure outcomes in chapter 4 of the code can be reconciled.

Where the retainer is not a rolling one, but the client regularly uses the firm's services, it may be preferable to have separate file records for each new matter rather than a general or open file to which new matters are simply added.

Again, it is essential that the firm's compliance systems accurately and transparently record such arrangements to avoid the conduct and commercial risks which may otherwise follow.

Tracey Calvert is a regulatory compliance specialist and the director of Oakalls Consultancy Limited. She is the author of Conflicts and Confidentiality for Law Firms and co-author of OFR: Compliance in Practice and COLP & COFA: Compliance in Practice, published by the Ark Group

oakallsconsultancy.co.uk

tcalvert@oakallsconsultancy.co.uk