Get Your Solicitor Files. I frequently seek out the files of a company’s solicitors for which I am a liquidator and often seem to have to go to some considerable lengths to justify the demand for production, which appears to me to be fundamental to enable me to comply with my statutory obligations as Liquidator.
I have spent much of the last 20 years in pursuit of solicitor files and thereby considering how best to how to get records from solicitors to enable investigation of the insolvent companies that I have been appointed over as liquidator.
Whilst I have done this in my capacity as Liquidator in many instances, the principles where matters of ‘agency’ are concerned will usually apply to any client seeking to get records from your accountant.
In doing so I have engaged in discussion about access and entitlement to such information from those who have acted in a solicitor capacity. My role as liquidator requires an enquiring mind and to obtain objectively reliable information. It is axiomatic that solicitor files are often a good source of information to assist my investigations.
How To Get Your Solicitor Files
How to get your solicitor files can sometimes be a challenging matter. On occasion, this has culminated in court action.
Engagement of the Solicitor
When considering how to get your solicitor files it is important to consider the nature of the engagement that you entered into with your solicitor. The solicitor will frequently be engaged to do in relation to important company transactions and may act as an agent in respect of filing documents for the relevant client. In fact, the list is potentially almost endless and can extend to a great many variations.
As a consequence, the solicitor could be the key source of the company’s financial information. This is why I regard it as one of the best sourced of such information and dedicate so much of my time in active engagement with such solicitors to obtain the same.
What is an Agent?
In very simple terms, an agent is someone who acts for a principal.
So if you are the client ie. ‘the principal’ and you need to authorise your solicitor to create and file your company’s documents, the act of filing the document will be done by your solicitor in the capacity as agent. The reason is they still are your company’s documents; they are not the documents of the solicitor! Without authorisation from you as Director of your company the solicitor could not file the relevant document.
That same position applies to HM Revenue and Customs in terms of filing the company accounts.
What Is The Agent’s Right to Possession?
How does the agency position help you to get your solicitor files? In Gomba Holdings UK Ltd v. Minories Finance Ltd  1 WLR 1231 at 1233C it was held as between principal and agent that documents prepared or received by agent belong to the principal.
It is generally a legal incident of agency and one which survives the termination of a retainer, that the principal is entitled to possession of its property in the hands of the agent, such as the documentation that is held by the agent relating to the principal.
This was considered in Green v Chubb  EWHC 221 (Ch) in which as Liquidator I sought files from a company’s former Administrative Receivers and where they constituted property of the company the application succeeded. Part of this case hinged on Section 234 of the Insolvency Act 1986 and the rights flowing under ownership. The Court amongst other things remarked “As regards section 234 there is little or no argument that the court may order a person to deliver up books and records that belong to the company in question.”.
In the matter of Fairstar Heavy Transport N.V. v Adkins and others  EWCA Civ 886 the following statement was made:
“…it is a legal incident of that relationship that a principal is entitled to require production by the agent of documents relating to the affairs of the principal.”
In Walker Morris v Khalastchi  1 BCLC in the following statement was made in the Judgment that was handed down in relation to documents to which a liquidator claimed:
“…The starting point is that the files are the property of the Company, and the liquidator is entitled to possession of them. The applicants have no right whatsoever to withhold them.”
Generally, documents for engagements where a solicitor acted as the agent will often be the property of the client. This could be very important to enable you to get your solicitor files.
There appears not only no right for the solicitor to deny the liquidator such documents but in fact, the solicitor might be taking needless risks in doing so. I shall come onto explain under the section below headed conversion.
In Lamb v Evans  1 Ch. 218 Lindley LJ summarised the law on agency relating to the agent’s fiduciary duties with respect to materials obtained during the engagement as follows:
What right has any agent to use materials obtained by him in the course of his employment and for his employer against the interest of that employer? I am not aware that he has any such right. Such a use is contrary to the relation which exists between principal and agent. It is contrary to the good faith of the employment, and good faith underlies the whole of an agent’s obligations to his principal. No case, unless it be the one which I will notice presently, can I believe be found which is contrary to the general principle upon which this injunction is framed, viz., that an agent has no right to employ as against his principal materials which that agent has obtained only for his principal and in the course of his agency. They are the property of the principal.
The point was developed in a post called Insolvency Act Powers – Reaching for the Section 236 pen; does the 234 one instead have more ink? about Section 234 of the Insolveny Act 1986 which culminated in a thought for the reader to consider when advised that there was no property of the company in liquidation in the hands of an adviser.
Whilst merely keeping someone else’s property is not a conversion, some overt act of withholding will be.
In Bryanston Leasings Ltd v Principality Finance Ltd  RTR 45 it was held that a conversion arose when registration books for a car were withheld by a receiver. Further, refusal to cooperate had amounted to a deliberate interference in the applicant’s property rights, rendering the defendants liable in conversion.
In Oakley v Lyster  All ER Rep 234, the judgment of Atkin J was referred to in Lancashire and Yorkshire Rail Co, London and NorthWestern Rail Co, and Graeser, Ltd v MacNicoll (1) where he says (118 LT at p 598):
“It appears to me plain that dealing with goods in a manner inconsistent with the right of the true owner amounts to a conversion, provided that it is also established that there is an intention on the part of the defendant in so doing to deny the owner’s right or to assert a right which is inconsistent with the owner’s right.”
The risk in conversion is that it is a tort of strict liability. Whilst this is not a direct basis for a liquidator to necessarily act in pursuit of the solicitor’s files, it is a good reason for them to be delivered up.
Documentation not owned by the Company
Ownership is only one basis of apparent entitlement of a Liquidator to documents called for from solicitors. The other is legal entitlement resulting from for example Section 235 of the Insolvency Act 1986. Where documents might not be owned by a company, the Liquidator can still levy some claim to them on the grounds of lawful entitlement resulting from the duty of a relevant person to cooperate with him or her.
A liquidator should be entitled to see all that the former Directors were entitled to see. Another good reason for a Liquidator to get the solicitor’s files.
It is axiomatic that in seeking to enable a relative stranger such as a Liquidator to unscramble a company’s affairs, that the papers of a former solicitor can be one of the most useful sources of succinct, concise, usable, well organised and well ordered, sources of information in relation to a company’s affairs.
Directors often may instruct solicitors to bring together for them the voluminous records to assist in compliance with their duties.
A liquidator could find themselves blinded by a lack of information and so fettering a liquidator’s ability to access information that was available to the former Directors, could amount to hampering them in the execution of their statutory function. The Company will have been the solicitor’s client. This is a separate engagement in its own right from another engagement by the former Directors personally.
A Liquidator is in effect a successor to the former officers of a company whose statutory framework is the Insolvency Legislation, not Companies Act. Notwithstanding the contract between a solicitor and a company is no longer live, confidentiality as against a Liquidator is generally untenable.
The duty of confidentiality is to the Liquidator as a company’s personality and agent. The solicitor requires the liquidator’s consent to disclose information concerning a company to third parties. The duty of confidentiality arises to protect the Company. It does not appear capable of being promoted to withhold information from a company and its Liquidator.
It is a position that should not fetter or obstruct a Liquidator seeking to gather information to satisfy his or her statutory duty to investigate the Company’s affairs in the furtherance of the interests of the Company and its creditors.
The duty of confidence was explained by Lord Goff at p 805 in A-G v Guardian Newspapers (No 2)  1 AC 109,  3 All ER 545,  3 WLR 776,:
“. . . a duty of confidence arises when confidential information comes to the knowledge of a person (the confidant) in circumstances where he has notice, or is held to have agreed, that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from [disclosing the information to others] . . . . The existence of this broad general principle reflects the fact that there is such a public interest in the maintenance of confidences, that the law will provide remedies for their protection.”
The following points that can crop up and affect how to get solicitor files as follows:
1. the costs of complying with a Liquidator’s request;
2. the lien over unpaid fees;
3. protection of data where solicitors are also often advising directors personally.
Costs of Compliance
The costs of complying with the request can be seen in some detail in my post “Costs: Section 236 of the Insolvency Act Compliance” which relevantly considered the case of Re Harvest Finance Ltd (In Liquidation); Jackson and another v Cannons Law Practice LLP and others  EWHC 4237 (Ch),  All ER (D) 216 (Dec) (“Re Harvest”) by Insolvency and Companies Court Judge Jones.
To get down to brass tacks, the costs of compliance can be an issue but generally, it would offend a) the mandatory characteristics of certain of the statutory provisions and b) frustrate the operation of a liquidator, if the costs of compliance were to render the duty to comply invalidated by the costs themselves. Re Harvest inter alia referred to the public duty aspect of such compliance. The Court however in Re Harvest did reserve the right to order costs of compliance but it was not a model of clarity as to when it would necessarily do so.
The Liquidator’s pursuit of the solicitor files might be greeted by suggestions of the right to claim a lien over the files for unpaid fees. This does in my experience consistently sprout as an issue to be addressed.
The simple position is that Section 246 of the Insolvency Act 1986 largely invalidates such a lien when claimed against a Liquidator. A lien enforceable against a Liquidator would be in relation to documents giving title to property but this generally would not apply to most of the papers that one would find parked within a solicitor’s files.
Many of the papers will likely be the property of the company in question and or copies of records that are property of the company and or arguably property of the solicitors which in themselves would not give title to property of the company.
Does GDPR Affect How You Get Your Solicitor Files?
GDPR and data protection ought not interfere with a Liquidator’s pursuit of the solicitor files. Responses to such a Liquidator request that might be forthcoming, such as “we were acting for the Directors in a personal capacity and by virtue of GDPR we cannot comply” arguably appear somewhat threadbare. GDPR does not appear to outflank the ability of a liquidator to obtain information that is reasonably required.
Ideally, the solicitor should avoid conflating instructions to act for the Director(s) personally with those of the company and mixing up such data. It occurs to me that there ought to be segregation of papers relating to the Director(s) personally with those of the company. If those papers are mixed up there appears no particularly good excuse for not separating them.
However, if data is mixed within a document (such as in emails which frequently does arise), then the availability of redaction should overcome this issue. Further, the Insolvency Act 1986 is not in conflict and or incompatible with the Data Protection Act 2018; the latter in any event having a useful exemption or curtailment in form of Paragraph 5 of Schedule 2, which appears to permit the processing of personal data if it is required to enable a data controller to comply with another obligation set out in legislation.
If you are in need of knowing how to get your solicitor files for any purpose and you appear to have had some trouble or uncertainty about how to get them and require assistance, our CEO Elliot Green will be able to help you. Do not hesitate to contact him via email at firstname.lastname@example.org or by calling 020 3925 3613.
Disclaimer: The comments in this post about how to Get Your Solicitor Files is not legal advice and ought not be relied upon as such. No liability is accepted by the author for any reliance placed upon the same. You should seek independent legal advice to consider the discrete facts of your scenario.