KSL ATP 105 PROFESSIONAL ETHICS

ONSONGO WYCLIFFE

CLASS TWELVE: RETAINER.

Introduction.

- A retainer refers to legal fees paid in advance by a client for unrendered services.

- It is paid in order to secure the Advocate`s services when need arises.

- A retainer is an engagement fee or a fixed amount of money that a client agrees to pay in
order to secure the services of a lawyer.

- It acts like a booking for legal services because it puts the advocate on call to handle
client’s issues.

1. THE NATURE OF A RETAINER.

There has to be a client who;

. Has power to pay
. Exercises the power to retain
. Is about to retain.

- A retainer is a contract between an advocate and client specifying the nature of the services
to be rendered and the cost of the service.

- In Njougoro & Co. Advocates vs Bank of Kenya Ltd Misc Appl. 286 of 2006 (2008)
eKLR, the court, quoting Musyoka & Wambua Advocates V Rastam stated that the
word retainer as used in Section 51(2) is synonymous with employment, engagement or
instruction.

- The court cited the above case where it had been held that “an advocate duly instructed is
retained and where there is no dispute that an advocate was duly instructed by the client on
any matter, the retainer cannot be said to be in dispute”.

- According to S.5 (2) of the Advocates Act, if a retainer is not disputed the court can enter
judgment for the sum certified.

- The court also cited Black`s Law Dictionary 6th Edition 1990, which states in definition
that in the practice of law, when a client hires an attorney to represent him, the client is said
to have retained the attorney. This act of employment is called a retainer.

- The retainer agreement between the client and attorney sets forth the nature of services to
be performed costs, expenses and related matters.

- In the Njougoro case, the Respondent engaged the professional services of the Applicant
to draw up a debenture. The Applicant duly drew the same and forwarded it to the
Respondent client for approval and then return it to the Applicant for registration. The
Respondent never returned it. The Applicant demanded fees for work done but it was
declined on ground that:
 a) There was no retainer.
b) No services were rendered.
c) There was no obligation to pay.

- Held; There was a retainer by the letter of instruction to draw up the debenture.

- A retainer agreement is a work for hire contract. It falls between a one-time contract and
full-time employment.

- Its distinguishing feature is that the client pays an advance for work to be specified later.

_It is common to pay a retainer fees to the lawyer to see a case through to its confliction.

- A retainer can be a single advance payment or a recurring (e.g. monthly) payment.

- The purpose of a retainer fees is to ensure payment for future servicer to be rendered.

- A retainer fees can be paid on a fixed, pre-negotiated rate or on a variable hourly rate
depending on the nature of retainer and the practice of the advocates being retained.

- Negligence of an advocate in a retainer> failure to register document within the stipulated

time by the advocate thus making the client loss the properly- breach of contract on the part
of advocate for which the advocate is liable for damages.

- The extent of a solicitor’s duty depends upon the terms and limits of that retainer and any
duty of care to be implied must be related to what he is instructed to do.

Is it ethical to be on a retainer?

- Retainer is a matter of practice that has not only acquired notoriety of the law but is
expressly provided for in law. S. 51(2) of the advocates Act “…in a case where the retainer
is not disputed, an order that judgment be entered for the sum certified to be due with
costs.”

- Midland Bank Trust Co. Ltd vs Hett Stubbs & Kemp 1978
Held; “If there is some practice in a particular profession, some accepted standards of
conduct which is laid down by a professional institute or sanctioned by common usage,
evidence of that can and ought to be received”.

- There is nothing unethical to be on a retainer.

- The only unethical issue about retainers is where an advocate falls to perform his duties as
per the retainer agreement once paid (Bank Trust Co. Ltd vs Hett Stubbs & Kemp
1978).

- A retainer imposes upon an advocate duties to his /her client. Some of the duties are:

i. Conflict of interest- if there is conflict, the Advocate must disclose in writing

and there must be written informed consent from the client authorizing the
Advocate to proceed with the matter.
 ii. Disclosure of inexperience-if the lawyer lacks the skills necessary to render the
services, he/she must disclose the inexperience and refer the client to a competent
lawyer.
iii. Impermissible contingent fees – a lawyer may not enter into a retainer contract
to charge a contingent fee for a criminal matter e.g. if the client is set free, the fee
is doubled etc.

- The retainer is based on the law of contract where freedom to contract is deemed essential

Effect of retainer on advocates` morals.

- Should clients pay fees through retainers so as to motivate and/or compel their Advocates
to handle suits?

- A Lawyer may require that a client advances money for anticipated legal services and
costs.

- An advocates needs to be motivated for doing his duties so long as he is duly retained and
duly paid.

- Motivation funds, other than legal fees, should be discouraged because it amounts to
accepting gifts from clients

- Retainer amounts paid for motivation, on top of legal fees, will deny the advocate the
freedom to turn down the client.

- Such fees should not be used to compel advocate to handle matters.

- Once the advocate has done his/her research and forms an honest opinion that the matter
need not be pursued further, may be by filling suit, unearned funds must be returned to the
client.

- Unearned funds must also be refunded on termination of the relationship.

- That way, a client cannot hold you by the leash and compel you to handle the matter.

2. MODES OF RETAINERS

There are several types of retainers.

i. Expressly agreed upon retainers-when a retainer is constituted or subsequently varied
by mutual consent.

ii. Retainer implied by law- even though nothing has been expressly agreed. In Omulele &
Tollo Advocates V Magnum Properties Ltd (2016) eKLR, it was held that the court may
imply the existence of a retainer from the conduct or acts of the parties in the particular
case.

iii. Retainer expressly imposed by law – on condition that it is applicable to the retainer.
 iv. General retainer- secures the services of an Advocate when needed. It runs indefinitely
and payment may be from time to time. It ends when one party gives notice to the other.

v. Specific retainer –it is an agreement for a specific reason e.g a specific conveyance or
litigation. Its duration depends on how long the specific activity takes to be completed.

vi. Refundable retainer-when money not earned is refunded.

vii. Non-refundable retainer- money not refunded whether the services are offered or not.

viii. Hybrid retainer –a mixture of any of the above.

Elemnts of a good retainer agreement

. Define the scope of your services

. Define the duration of your services
. Explain and agree on the fees arrangement
. Explain the client’s obligations for costs
. Explain your billing practice
. Indicate the services to be offered and billed to the client
. In case of disagreements allow your client to question your biil and justify it with
reasons
. Consider a fee arbitration provision

3. AUTHORITY OF AN ADVOCATE ON RETAINER.

- A retainer is the basis of authority of an advocate. However; it also limits authority (it does
not create a general relationship for all time purposes).

- Advocates may only transact business outlined in a retainer.

- A general retainer, however, may authorized all such matters as flows from the retainer, but
those that require special authority will not be implied.

- The authority of an advocates in a retainer may be

I. Express
II. Implied
III. Apparent
IV. Usual

Ostensible authority of an advocate in contentious matters.

 - In litigation, advocates are authorized to accept service of proceedings that do not require
personal service on behalf of their clients.

- In civil litigation, any admissions made by an Advocate in accordance with the facts before
the court, in order to dispense with the requirement to proof, will bind the client.

- An advocate must make arrangements as to how to proceed with the trial e.g. if by a test
case, she must abide by the decision and procedure of the test suit.

- The advocate must act as the client `s agent in matters reasonably expected to arise for
decisions in the cause of proceedings. In Waugh v. HB Clifford & Sons Ltd (1982) Ch
374, a firm of solicitors settled an action contrary to its client’s instructions. It was held that
the settlement agreement was binding on its client.

- An advocate can receive payment on behalf of the client.

- An advocate can produce documents in court on behalf of the client.

Ostensible authority of an Advocate in non-contentions business.

- Authority to hold or have custody of deeds.

- Authority to receive the consideration on a sale.

King Woolen Mills ltd and another vs Kaplan & Stratton Advocates Civil Appl. No. 55 of
1993.

- The case illustrates how a retainer limits an advocates` authority.

- The court held that the retainer relationship created a fiduciary relationship between the
client and advocate which required that the information acquired by the advocate while
representing the client should be confidential and not disclosed to another person unless the
client consents to it.

- The case also demonstrates how an advocate can exercise his/her authority to hold or have
custody of deeds.

Nocton vs Lord Ashburton (1914) ac 932.

- This is an old English case on tort law concerning professional negligence.

- It illustrates how, in a retainer relationship , a solicitor will be taken to have assumed

responsibility for the welfare of another and that responsibility extends to unequivocal
professional legal advice.
- Held that the solicitor (Nocton) was liable for his bad advice given in a fiduciary
relationship between the solicitor and client.

Re Storer (1884) 26 ch D 189 The case illustrates how a retainer limits the authority of an
advocates. There is no general relationship for all time purposes.

- The exception is a general retainer.

4. WHAT ARE THE LIMITS OF A RETAINER?.

i. An Advocate should act within his client`s express instructions

- As already seen in Waugh vs HB Clifford and Sons Ltd (1982) ch 374, a firm of
solicitors settled an action contrary to its client`s express instructions. The court held that
the settlement agreement was binding on its client.

- The above scenario may lead to unnecessary complaints against the advocate.

ii. An Advocate should avoid retainers where there is conflict of interest.

iii. An Advocate should avoid retainers with improper relationship with
clients.
iv. Avoid a retainer where you are likely to be called as a witness to your
client.
v. Avoid retainers which amount to vouching for your client. e.g. where you
are compelled to be your client`s mouth-piece and give evidence
suggesting your client to be honest, truthfully or good or that the
document he has produced is genuine.
vi. S.46. of the Advocates Act there is no retainer in invalid agreements.
vii. Avoid standing surety for you client.
viii. Do not borrow money or anything else from your client.

ix. Do not accept gifts from your clients.

Case Law

a) Groom vs Crocker,(1939) IkB 194 (1938) 2 all ER 394. Held

that lawyers are bound to exercise a reasonable degree of care, skill
and knowledge in all legal business they undertake. Their liability
arises out of contract.

b) Kays & Another Vs Boutler & others Held> where there is

conflict of interest; it is for the clients involved and not for the
court to decide whether or not a solicitor could act.
 c) East African foundry works Vs Kenya Commercial Bank LTD
HCC No. 1077 of 2002 (2002) eklR.Held: An Advocate must
avoid swearing Affidavits based on contested facts on behalf of the
client. The affidavit may be struck out.

d) Immanual Inchor Imana VS David Ethure & 2 Others (2006)

eKLR.
Held;An advocate will only be barred from acting where it is
demonstrated that real mischief and prejudice will in all human
probability occur.

e) Delphis Bank VS Challe(2005) eKLR

Held; There is no real prejudice or mischief when an advocate will
not be required to testify or to testify only as to the formal aspects
of a document that he prepared.
-Held; for conflict of interest to suffice, the person who was
alleging conflict of interest must prove real prejudice and mischief
in all human probabilities.

Advantages of Retainer Agreements.

i. Prevents a Lawyer from representing the client`s competitor (see King Woolen mills Ltd
and another vs Kaplan Stratton Advocates)
ii. The client can obtain services of an Advocate at any time.
iii. The client usually gets a discount and is aware of how much they will spend every
month.
iv. Assists the client with budgeting for unpredictable levels of legal services.
v. It locks in a guaranteed amount of work for the Advocate.
vi. It is an incentive to compensate the advocate for clients lost.

Termination of Retainers.

i. By notice from client

ii. Upon performance of activity specialized in the retainer.
iii. By court order.
iv. By effluxion of time- when retainer is for a fixed percent.
v. By death of the client
vi. Where the contract becomes illegal.
vii. Where the party loses the capacity to act.
viii. Through insanity or bankruptcy of either party.
ix. Through breach by the client e.g. non –payment of fees or inadequate instructions.
 x. Through fraudulent activity by the client.
xi. Through a frustration of the retainer.
xii. On withdraw of instructions by the client.
xiii. By an Advocate`s withdrawal.

Effects of Termination
. In civil litigation, the duty to act continues for as long as the advocate is on record
until he is removed from record.
. Upon the death of a client, the personal representatives of the client remain liable
to the advocate for work done.
. An advocate is entitled to full fees where the client terminates the retainer without
justification.
. In the above circumstances, an advocate can retain documents until his lien is
justified.
. Otherwise, the client’s files, documents, property and any funds held on the
client’s behalf should be returned to the client.

6. ACT GENERALLY AUTHORIZED UNDER A RETAINER.

In Hawkins Hill Gold Mining Co. Ltd V Briscoe (1887) 8 LR (NSW) (Eq) 123,
it was held that fundamentally, the extent of a lawyer’s authority depends on the
construction of the retainer, in which terms can be implied as well as expressed.
. A retainer can authorize an advocate to act when need arises. This applies when
an advocate is retained in advance or in anticipation of the clients need for legal
services.
. A retainer can authorize an advocate to institute new proceedings in court. In
Danish Mercantile Co. Ltd Vs Beaumont (1951) 1 All ER 925, it was held that
an advocate must obtain authority before instituting action.
. To defend a client in proceedings newly instituted.
. In practice, ad advocate may have general instructions to act for a client and
receive an agreed retainer as his fees. When an advocate is however instructed to
file a suit, special care is required on the part of the advocate to ensure that
necessary authorization has been given to institute suit.
. To take over a matter already instituted before court and proceed to prosecute or
defend it.
. To represent a client in criminal proceedings before court.
. In some cases,eg traffic cases, an advocate can be retained and given authority to
take plea on behalf of a client.
. Authority to do conveyancing, commercial transactions etc on behalf of a client.
. Receive summons and other pleadings.
. To receive money or make payments on behalf of clients.
. To have custody of deeds, charge documents and any other document.

END

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