A key question when a claim is brought against any professional is the scope of the duty of care owed by that professional.
The recent decision in The Football League Limited v edge ellison deals with the difficult question of the scope of duty, if any, which a professional owes beyond the express terms of the retainer.
The court upheld the principles that there is no such thing as a general retainer and only in limited circumstances will a professional’s (here a solicitor) duties go beyond the express terms of his retainer. Moreover, the decision evidences a continued willingness seriously to curtail the circumstances in which a professional will bear responsibility for business decisions made by commercially astute clients.
The Football League had argued that edge ellison was in breach of duty in failing to protect its commercial interests during negotiations with ONdigital (now ITV Digital) for the licensing of its broadcasting rights in 2000. When ITV Digital later collapsed, the Football League was left with substantial losses. It claimed that edge ellison should have advised its Commercial Committee of experienced businessmen to consider seeking parent company guarantees from ITV Digital’s ultimate owners, Carlton and Granada.
The court concluded that at no point had edge ellison been instructed to advise on, or obtain the security of parent company guarantees. Taking into account the Commercial Committee’s admission that they fully understood the concept of parent company guarantees, the court also concluded that the Commercial Committee had implicitly taken the commercial decision that it was content to deal with ITV Digital alone, and at no point had the committee intended that guarantees should be sought.
The key issue was therefore whether, absent a specific direction to do so and against this factual background, edge ellison owed a duty to the Football League proactively to seek its instructions as to whether parental guarantees should be sought.
In ruling that edge ellison owed no such duty, the court concluded that the issue of whether guarantees should be sought was not a "hidden pitfall" (Pickersgill v Riley (2004)) but a pure business decision made by experienced committee members who were well aware of the potential risks and in which the solicitors had "no implied duty to play any part in". Further, the circumstances did not warrant the imposition of a duty on edge ellison to prompt the Commercial Committee to consider the issue of bidder-solvency.
Although the decision in Football League concerned a solicitor, similar principles are likely to apply to other professionals. Surveyors acting for a freeholder on the assignment of a lease, for example, may encounter the argument that they should have advised on the desirability of obtaining parent company guarantees from the assignee. Valuers retained for a specific, limited purpose (for example retained by a purchaser to check that the price is right) may still be vulnerable to claims that they should have offered unsought advice on the wisdom of entering into a property transaction. In these such situations, as in Football League, the express retainer will be the starting point and the experience of the client is likely to be key in shaping the duty owed. However, the recognition by the court in Football League of the need to limit the circumstances in which a professional becomes liable to underwrite commercial decisions made by their clients is surely welcome.
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