Listen, listen and listen again

Year Published: 2014

One of the best compliments I have received from a client, who also happened to be an international lawyer, was that she was very impressed with my listening skills, something she had not found to be a common skill amongst lawyers.

If you ever thought this was a superfluous skill for a lawyer then think again as the recent case of Wellesley Partners LLP v Withers LLP [2014] EWHC 556 (Ch) highlights.

In this case Withers have been ordered to pay £1.6m as a result of getting their client’s instructions wrong.

Wellesley was in recruitment and was run as a Limited Liability Partnership. It brought a negligence claim against its solicitors, Withers, in relation to the work they did on a partnership agreement.

Wellesley had reached an agreement with a Bahraini bank, Addax, for Addax to invest a £2.5m capital contribution in exchange for a 25% interest in the partnership. Wither’s was instructed in 2008 to draft a new partnership agreement. The agreement was to include an option for Addax to withdraw 50% of its capital contribution.

In 2009 Addax exercised its option to withdraw 50% of its capital contribution causing significant difficulties to Wellesley.

Wellesley was surprised that Addax was doing this as they had understood that the option could only be exercised after 42 months. It came to light that the partnership agreement drafted by Withers had provided that the option had to be exercised in the first 42 months rather than after 42 months.

It was Wellesley’s case that they had instructed Withers to draft the partnership agreement so that the option was exercisable after 42 months and that contrary to their instructions Withers changed this to be exercisable during the first 42 months. I am sure you will agree that this is fundamentally different and not particularly commercially savvy.

Other allegations were made in the case which relate to the negligence claim and assessing the losses to Wellesley. However, for present purposes it suffices to concentrate on the fundamental error in the drafting of the partnership agreement.

The court held that Withers had been negligent in drafting the partnership agreement in that they had drafted the option contrary to their instructions. The court found that the lawyer at Withers had either misunderstood his instructions or had noted them incorrectly. The court also commented that where instructions are unclear, there was a duty on the solicitor to clarify the instructions.

This was certainly an expensive mistake.

What is there to learn from the case?

It is essential you listen carefully to your clients instructions. Not only is this an attentive service in any event, it could prevent problems down the line.

If you are in any doubt seek clarification and then confirm your understanding of the instructions.

For more information on client instructions, please contact our Dispute Resolution team on 0161 475 7676.

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