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Client ordered to pay firm’s fixed fee despite matter falling through

[CLI Code] CLI.N.16742505(EN) 

The High Court has ordered that a law firm should be paid for months of work it carried out on a bond issue despite the transaction eventually being aborted.
In Blacklion Law LLP v Amira Nature Foods Ltd & Anor His Honour Judge Paul Matthews ruled that central London firm Blacklion completed more than 90% of the work that would be needed for the transaction and should received the agreed £300,000 fixed fee.
The defendants had argued that the retainer for the matter known as Project Avatar was ‘clear and unambiguous': the £300,000 fixed fee was ‘subject to the completion of the matter'. It was submitted that these words meant that nothing would be payable to the firm if the matter did not complete.
But the solicitors said there was more than one possible construction of the words, pointing out they had carried out a ‘huge amount' of work on the project amounting to 88 eight-hour days for ‘very demanding' clients'.
In his ruling, the judge agreed that the retainer language was not unambiguous, and while ‘subject to' introduced an element of conditionality, there could be no expectation that lawyers working on a New York bond issue would be paid solely on a contingency basis.
The work had begun in January 2017 and continued for six months, although the retainer itself was not signed until May 2017, by which time Blacklion managing partner Negar Yazdani had already recorded more than £385,000 worth of time on the matter.
The judge said: ‘It is not likely that a small law firm such as the claimant, with all its cash-flow needs, would be prepared to tie up a huge proportion of its available human resources on a project to be paid only if it was successful.But let me suppose that I am wrong about that, and that Ms Yazdani (who came across as a cautious person) was in effect prepared to “bet the firm”. In my judgment it would make no commercial sense whatever for the claimant in early May 2017 to agree to a contingent fee arrangement under which it would be paid a fee of far less than its recorded time so far.'
The judge ordered that the former client pay £300,000 for the work done and ordered further damages of £300,000 be paid by one of the defendants for causing the firm loss.
The court heard that the firm had already successfully applied for summary judgment on a separate retainer with the same client. In April this year, Costs Judge Leonard found that Blacklion was due £65,000 for that retainer along with £83,000 interest and £37,000 costs. The sums were due to be paid by the end of April but by the time of the Project Avatar costs trial in late May, nothing had been paid.
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