- 21st August 2017
- Posted by: Seatons Law
- Category: Articles, General
Solicitors are often friends as well as advisers to their clients and are well placed to offer protection at moments of vulnerability. Exactly that happened in one case, in which a terminally ill financier proposed giving £5 million to a girlfriend before his lawyer counselled him to exercise restraint.
The financier, the bulk of whose fortune was held in an offshore family trust with assets of about £230 million, had become very close to the woman, who was almost 30 years his junior. He was aware that he was dying from an incurable disease when he proposed making the gift. He was by that time paying her a £10,000 monthly allowance and had bought her a valuable flat.
However, his affection for the woman was not shared by the trustees, who enjoyed a broad discretion as to what payments should be made from the fund and owed legal duties to other beneficiaries, including the financier’s children. One of them did not trust the woman and viewed her as greedy and undeserving. They balked at paying her a lump sum, but agreed that she should receive £5 million by 10 instalments of £500,000, payable over a five-year period.
The trustees, however, subsequently changed their minds on the basis that, in their view, the woman was exerting excessive control over the financier’s life, was having too much money spent on her and was seeking to dismantle arrangements that had been made for his care. After the first two £500,000 instalments were paid, the trustees declined to make any further payments.
Following the financier’s death, the woman launched proceedings against the law firm that had for many years advised him. She argued that she was as much the firm’s client as the financier and that it had breached the duty it owed her in ignoring her financial interests in its dealings with the trustees.
In dismissing her claim, however, the High Court found that she had never had any right to a share of the financier’s fortune and that her status was merely that of a beneficiary of his largesse. She had no bargaining position to protect and the firm had only ever represented the financier, not her. The firm owed her no duty of care and the Court expressed admiration for the steps taken by a partner in the firm to ensure that the financier, who was also a friend, did not fall victim to his own folly.