In Harcus Sinclair v Your Lawyers [2021] UKSC 32, the court held Harcus Sinclair LLP was in breach of a non-compete clause with Your Lawyers after setting up a rival emissions claimant group. However, it also held the undertaking was not enforceable as a solicitor’s undertaking.
Solicitor’s undertakings are central to many legal transactions, particularly conveyancing, where a solicitor’s promise allows money to flow between parties because, as well as being contractually binding, the court has inherent jurisdiction over solicitors as officers of the court.
The Supreme Court noted Parliament last re-affirmed this inherent jurisdiction in 1974, since when LLPs have been introduced and the legal services market liberalised.
Kingsley Napley partner Iain Miller said the decision ‘clarifies that incorporated law firms such as LLPs are not subject to the court’s inherent jurisdiction to enforce undertakings and that this jurisdiction only applies to individual solicitors.
‘In addition, even if the undertaking is given by a solicitor on behalf of their firm, then the individual is not personally liable on the normal rules of agency.’
Miller said the case ‘raises an important issue for all those who give and rely on undertakings.
‘While it is still possible to report a LLP to their regulator for failing to comply or bring a breach of contract claim, both will take time. The absence of a summary remedy is significant; not least because solicitors' undertakings are seen as cast iron. Law firms and their risk teams will need to ensure that steps are taken to mitigate the impact of the Supreme Court’s decision.’
Aman Johal, director of Your Lawyers, said: 'Until the process is reformed, we strongly advise those seeking a solicitor’s undertaking to take a kitchen sink approach and insist on a signature from the individual solicitor and partners and to insist that they are signing not only on behalf of the corporate entity, but also personally.’
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