Does a barrister have the capacity to agree to a retainer?

The Court of Protection (CoP) had to determine the preliminary issue of contractual capacity in a claim for a detailed assessment of solicitors' fees. The core question of this case is whether a client, suffering from a neurodegenerative disorder, has the capacity to enter into a retainer agreement with a law firm.

Facts:

The defendant, a renowned barrister and academic born in 1933, was diagnosed with mixed Alzheimer's and vascular dementia in August 2020. In October 2009, he executed Lasting Powers of Attorney (LPAs) for Property and Affairs to two former colleagues, JT and SK. 
In late 2020, the attorneys received notice that these LPAs had been revoked, and that new LPAs appointing the defendant's nephew and niece, SL and TL, were in the process of registration. The 'new attorneys' asserted that, in October 2020, the defendant had engaged the claimant firm of solicitors to create a new will that left significant bequests to SL and TL.

Concerns about the defendant's capacity led the original attorneys (JT and SK) to issue an application for court directions in early 2021. This resulted in a High Court order on 21 January 2021, suspending the processing of the LPA revocations and new LPA registrations, and inviting the Official Solicitor to act as the defendant's Litigation Friend.

The retainer agreement between the claimant solicitors and the defendant was dated 4 October 2020, consisting of a Client Care Letter and Terms of Business. Pursuant to this, the claimant issued seven invoices totalling £72,850.64, with £71,850.64 remaining outstanding. The defendant argued that he lacked contractual capacity on 4 October 2020, rendering the retainer unenforceable with no fees payable.

Decision: 

The CoP ruled that the presumption of capacity under the Mental Capacity Act (MCA) 2005 was not discharged based on the wealth of evidence. The Costs Judge confirmed the standard of proof is the balance of probabilities for proving incapacity, rejecting the claimant's "high burden" assertion. He also firmly reiterated that constructive knowledge of incapacity is sufficient to render a contract voidable. 

The Judge was not satisfied that the defendant had lost contractual capacity by October 2020. Instead, he found as a fact that the defendant did have contractual capacity when the retainer was signed on 4 October 2020. He found the Mental Capacity Consult (MCC) reports to be accurate and reliable for that period, and noted the Office of the Public Guardian’s consistent conclusion in January 2021. The Judge determined that 22 June 2021 was the earliest point at which the conclusion of the defendant's lack of capacity to contract could be confidently stated.

Finally, the Judge found that the claimant's solicitors had actual knowledge of the defendant's lack of capacity from 29 July 2021. The initial retainer was thus found to be valid.

Implications:

This case highlights that the capacity is not an ‘all or nothing’ concept, nor is it static. The Judge's finding that the defendant had lost capacity by June 2021, despite having it in October 2020, highlights that solicitors must continuously monitor their client's capacity throughout the period of a retainer. A contract with an incapacitated person can be avoided if the other party has actual or constructive knowledge of the incapacity.

The case reiterates that there is a presumption of capacity, and the burden of proof lies with the party alleging incapacity. The standard of proof is the balance of probabilities. This means that clear evidence is needed to rebut the presumption.

This judgement underscores the critical importance for solicitors to undertake and document proactive and appropriate capacity assessments at the very beginning of a retainer, especially when dealing with elderly or potentially vulnerable clients, even if they are highly distinguished professionals.