The SRA has published new guidance on terminating a retainer, providing welcome clarification on when it is appropriate to stop acting for a client and how this should be managed.
The guidance is particularly important because the termination of a retainer is not simply a contractual issue. Firms must also consider their regulatory obligations, the client’s interests and the potential for professional misconduct allegations if matters are handled poorly.
The Starting Point: A Retainer Is an “Entire Contract”
The SRA reiterates the long-established common law position that, unless otherwise agreed, a solicitor who accepts instructions is expected to conduct the matter through to its conclusion. As a result, a solicitor or firm cannot simply stop acting whenever it becomes inconvenient or commercially unattractive to continue.
To terminate a retainer lawfully, there must generally be:
- a good reason for terminating; and
- reasonable notice given to the client.
The guidance makes clear that firms should assess each situation individually and carefully document their reasoning.
What Counts as a “Good Reason”?
The SRA provides a non-exhaustive list of circumstances that are likely to justify termination. These include situations where continuing to act would place the solicitor in breach of legal or professional obligations. Examples include:
- conflicts of interest;
- inability to comply with anti-money laundering obligations;
- clients insisting on advancing arguments that are not properly arguable;
- clients misleading the court or committing perjury; and
- breakdowns in trust and confidence.
The guidance also recognises more practical issues, including:
- failure to provide instructions;
- abusive, offensive or discriminatory behaviour towards staff; and
- failure to pay costs or disbursements.
Importantly, the SRA emphasises that contractual termination clauses in engagement letters do not override common law duties or regulatory obligations.
Non-Payment of Fees: Important Distinctions
One of the most useful parts of the accompanying case studies concerns unpaid fees.
The SRA distinguishes between:
Contentious Matters
In litigation matters, section 65(2) of the Solicitors Act 1974 may permit termination where a client fails to pay a reasonable sum on account within a reasonable time.
However, firms should still:
- ensure the amount requested was reasonable;
- give reasonable notice before terminating; and
- consider whether any hearings or deadlines make termination inappropriate at that stage.
Non-Contentious Matters
For non-contentious work, such as wills or transactional matters, the position is more complicated. A solicitor cannot necessarily terminate simply because a payment on account has not been made unless the contractual terms expressly permit this.
This serves as a reminder of the importance of carefully drafted engagement letters and terms of business.
Refusing to Follow Advice Is Not Automatically Enough
The SRA also addresses a common frustration for practitioners: clients who refuse to follow legal advice.
The guidance makes clear that a client is generally entitled to reject advice and pursue a different strategy. This alone will not usually justify terminating the retainer.
However, termination may become justified where:
- the client’s proposed position is hopeless or unarguable;
- the client seeks to mislead the court; or
- the relationship has broken down due to abusive or unreasonable behaviour.
Reasonable Notice Matters
The guidance repeatedly stresses the need to give “reasonable notice” before terminating. What is reasonable will depend on the circumstances, including:
- the complexity of the matter;
- whether proceedings are ongoing;
- any upcoming hearings or deadlines; and
- the time required for replacement solicitors to become familiar with the case.
The SRA specifically warns that terminating shortly before a hearing is unlikely to be considered reasonable unless exceptional circumstances apply.
Firms Must Mitigate Risk to Clients
Even where termination is justified, the SRA expects firms to take reasonable steps to minimise prejudice to the client. This may include:
- assisting with transfer of the file;
- identifying urgent deadlines;
- notifying the court or other parties where appropriate; and
- cooperating with replacement solicitors.
This reflects the regulator’s continued focus on client protection and service standards.
Equality and Discrimination Risks
The guidance also highlights the importance of complying with the Equality Act 2010 when deciding whether to stop acting for a client.
Firms should ensure decisions are objectively justifiable and not influenced by protected characteristics or personal views. The SRA confirms that allegations of discriminatory termination will be treated seriously.
Practical Steps for Firms
The new guidance is a useful reminder that terminating a retainer is rarely risk-free. Firms should consider:
- reviewing and updating engagement letters;
- ensuring clear payment-on-account provisions;
- documenting concerns and decision-making carefully;
- assessing timing and client prejudice before terminating; and
- maintaining evidence of mitigation steps taken.
For COLPs and compliance teams, this is also an opportunity to review internal policies and fee earner training on disengagement procedures.
Final Thoughts
The SRA’s new guidance provides much-needed clarity on the regulator’s expectations. The key message is clear: firms must approach termination carefully, fairly and with the client’s interests firmly in mind.
A poorly managed termination can expose firms not only to complaints and negligence claims, but also to regulatory scrutiny.
Source materials:
SRA Guidance: Terminating a Retainer
SRA Case Studies: Terminating a Retainer
