In a judgement made last week the ruling went against Shepherd, which has launched legal claim against own lawyer Pinsent Masons
Shepherd Construction has lost the first round of its £10m High Court case against its own lawyer Pinsent Masons.
In a highly unusual step, Shepherd last year launched a legal claim against Pinsent Masons alleging “negligence” in the drafting of its contracts and arguing that the law firm owed it a “duty of care” to advise it of the impact of new contract law.
The North Yorkshire-based contractor had been left with costs of more than £10m because of having to pay subcontractors working on the £210m Trinity Walk shopping centre in Wakefield after its client, Trinity Walk Wakefield, went into administration in 2009.
There is something worrying if professionals are to be held responsible for reviewing all previous advice
Mr Justice Akenhead
Pinsent Masons had drafted a “pay-when-paid” clause in the late nineties to protect Shepherd from such an event, but had not updated it to take account of changes the 2002 Enterprise Act, meaning Shepherd was forced to pay out on its subcontracts.
However, in a judgement made last week on one of its key arguments, Mr Justice Akenhead ruled against Shepherd, arguing that there was no evidence of “some overarching general retainer” by which Pinsent Masons was required to review all its previous advice, despite the longstanding relationship between the two firms.
“There is something commercially and professionally worrying if professional people are to be held responsible for reviewing all previous advice or indeed services provided,” Akenhead said.
“In the field of architects and engineers, their retainers may require them to keep under review designs which they had produced during the course of those retainers. If during the defects liability period an architect either ascertains or should ascertain that the design […] is defective, possibly in the light of new practice, it may well be that his or her retainer requires him or her at least to raise this with the client.
“However, the fact that the architect or engineer has a number of commissions with the particular client would not mean […] they must review the designs on completed commissions.”
Shepherd had argued there was a “single contract” with Pinsent Masons because of an ongoing and close relationship between the two companies and the fact that it dealt with largely the same individuals as the law firm evolved over the years.
The judge said: “It is going to be difficult in most cases to imply a single contract or general retainer simply because there is a long-standing professional relationship between solicitor and client.”
The case continues.