A solicitor who was ‘squeezed out’ of his partnership with another lawyer by the latter’s repeated breaches of contract following a bitter falling-out between them is in line for substantial compensation following a Court of Appeal ruling.
Solicitor A had entered into a partnership with solicitor B which was meant to endure for at least four years; however it was terminated by mutual agreement after less than three years. A judge subsequently found that the cause of the early termination was the conduct of solicitor B, which had made it intolerable for solicitor A to continue in partnership with him.
Under the agreement, solicitor A had been entitled to guaranteed minimum drawings from the partnership and the judge’s decision entitled him to damages to reflect the financial loss he had suffered as a result of the agreement having been terminated fifteen months before expiry of the minimum term.
On appeal, solicitor B did not challenge any of the judge’s individual adverse findings against him, nor his overall assessment of his conduct in the context of the partnership agreement. He also accepted that that his behaviour had been the underlying cause of the partnership’s early termination.
However, his legal team pointed out that none of his breaches of contract had occurred during the final three months of the partnership and argued that solicitor A had affirmed the agreement by continuing to make drawings and to work in furtherance of the partnership’s business. There was, it was submitted, no ‘last straw’ that had caused solicitor A to withdraw from the agreement.
However, in dismissing the appeal, the Court observed that the detailed criticisms of the judge’s individual findings ignored his overall conclusion that solicitor’s B’s breaches were ‘symptomatic of a more fundamental failure’ by him to comply with the partnership duties he owed to solicitor A.
The Court concluded, “This was a course of conduct which, viewed as a whole, represented a continuing breach of solicitor B’s essential obligations, which he had done nothing to remedy during the last three months of the partnership and which amounted to conduct designed, in the end successfully, to squeeze solicitor A out.”