Scots law firm awarded £100,000 in unpaid fees after former client fails in appeal

A Scottish law firm which sued a former corporate client for payment of over £100,000 in unpaid legal fees has won its action after the company lost an appeal.

The Inner House of the Court of Session upheld a judge’s decision that the firm was entitled to payment of their fees and that a counterclaim by the company should be dismissed.

Lord Brodie, Lady Clark of Calton and Lord McGhie heard that between May 2002 and September 2012, when their instructions were withdrawn the pursuers and respondents MacRoberts LLP acted for the defenders and reclaimers McCrindle Group Limited (MGL), a mechanical engineering and contracting company.

From May 2003 the pursuers acted for MGL in relation to disputes with MGL’s former solicitors, Maclay Murray & Spens (MMS), the Law Society of Scotland and the Faculty of Advocates.

The work in relation to the dispute with MMS included the raising and pursuing of a commercial action for damages for breach of contract and professional negligence, which came before Lord Hodge for proof in November 2012.

In the present action the pursuers sued for unpaid fees and outlays in respect of work in relation to that action against MMS and also in relation to the matter concerning the Law Society, with the sums sued for amounting in total to £104,065.57.

In their defence to the action MGL took no issue with the fact that the pursuers did work on their behalf or that the fees sued for had been properly quantified, but the company claimed that no fees were due to the pursuers as the firm wase in “material breach” of their contract to provide professional services.

If that was not correct, MGL contended that they were in any event entitled to retain what they would otherwise be due to pay against their claim for damages made by way of counterclaim.

The company counterclaimed (i) for damages consisting of expense incurred as a consequence of having had to engage a new firm of solicitors shortly before the proof in the action against MMS and (ii) for fees paid to the pursuers for work that would not have been required if the breach of contract had not occurred - the sums amounting to £72,000.

The action came before the Lord Ordinary, Lord Tyre, sitting as a commercial judge, for proof on all issues other than those relating to quantification of fees and damages. Having heard proof, as is explained in his opinion of 10 June 2014, the Lord Ordinary found the pursuers entitled to payment of their fees.

In so doing he repelled MGL’s plea that the pursuers were not entitled to insist upon performance by MGL because of the pursuers’ material breach. He also assoilzied the pursuers from the conclusions of the counterclaim.

The defenders reclaimed, arguing that the Lord Ordinary erred in law, but Lord Brodie - with whom the other judges agreed - refused the appeal.

In a written opinion, Lord Brodie said: “In summary, in my opinion the only aspect of MGL’s case which is now insisted upon fails, first, because it was not established in evidence, and, second because it was in any event irrelevant in that it depended upon the implication of a contractual term which I consider cannot be implied.”