The SRA’s May 2026 guidance on terminating a retainer is a useful reminder that ending a client relationship is not just a contractual issue. It is also a regulatory risk point.
The basic position is familiar enough. A solicitor cannot usually walk away from an existing retainer without good reason and reasonable notice. But the guidance is helpful because it pulls together the common law position, the SRA’s regulatory expectations and the practical steps firms should take before telling a client they can no longer act.
For COLPs, supervisors and fee earners, the message is simple: if you are going to terminate a retainer, make sure you can explain why, show that the decision was lawful and fair, and evidence the steps taken to protect the client’s position.
The purpose and scope of the guidance
The SRA guidance deals with termination by the solicitor or firm. It does not cover situations where the client ends the retainer, or where the retainer ends automatically, for example because the client has died.
The SRA is not rewriting the law of contract. It is concerned with professional conduct: whether the firm has considered the legal position properly, whether the client has been treated fairly and whether any risk to the client has been reduced as far as possible.
The common law basics: good reason and reasonable notice
The starting point is that a solicitor’s retainer is, unless agreed otherwise, an entire contract to conduct the matter to its conclusion. That principle comes from Underwood, Son & Piper v Lewis [1894] 2 QB 306.
In practical terms, that means a firm should not simply stop acting because a matter has become difficult, unprofitable or inconvenient.
The SRA guidance focuses on two requirements:
- a good reason for terminating the retainer; and
- reasonable notice to the client.
Both are fact-sensitive. The firm needs to look at the matter, the client’s position, any deadlines or hearings, the engagement terms, the relevant law and the potential impact on the client.
What counts as a good reason?
The SRA does not give a closed list of good reasons. That is sensible, because the answer will depend on the facts.
However, the guidance gives examples of situations where there may be good reason to terminate. These include:
- a conflict of interest;
- a breakdown in trust and confidence;
- being unable to obtain clear instructions;
- being asked to advance arguments that are not properly arguable;
- the client misleading the court and refusing to correct the position;
- being unable to complete customer due diligence under the Money Laundering Regulations;
- failure to provide funds for disbursements; and
- failure to pay a reasonable sum on account of costs in contentious business within a reasonable time.
The case study on costs on account is useful. In the SRA’s example, a firm acting in High Court proceedings asked a commercial client to pay £20,000 on account of costs. Two months passed without payment. The SRA’s view was that, provided the sum and the time allowed were reasonable, the firm would have good reason to terminate by giving reasonable notice.
The position is more nuanced in non-contentious matters. If a firm wants the ability to terminate because a client has not paid money on account of costs, that should be dealt with properly in the engagement terms. In particular, the requirement to pay on account should be made a condition of accepting instructions, or otherwise agreed with the client.
A client ignoring advice is not necessarily enough
One point worth stressing is that a client refusing to follow advice is not, by itself, usually a good reason to stop acting.
Clients are entitled to make decisions we disagree with, provided they are properly informed and the course they want to take is lawful and arguable. The position changes if the client wants the firm to put forward a case that is hopeless, mislead the court, act dishonestly or otherwise breach professional obligations.
That is the dividing line firms need to keep in mind. A difficult client is not automatically a terminable client.
Equality Act and discriminatory behaviour
Any decision to stop acting must itself be lawful. Firms need to be careful where the reason for termination could be connected to a protected characteristic under the Equality Act 2010.
That does not mean firms have to tolerate abuse or discriminatory behaviour from clients. Offensive or discriminatory behaviour may amount to a good reason to terminate, depending on the circumstances. In many cases, the safer approach will be to warn the client, explain that the behaviour cannot continue and give them an opportunity to respond. In serious cases, immediate termination may be justified.
Reasonable adjustments also need to be considered where disability may be relevant. If the firm decides to terminate, the file should show that the decision was based on proper professional, legal or contractual reasons, not on assumptions about the client or their circumstances.
Reasonable notice and client protection
Reasonable notice depends on the matter. Relevant factors include:
- the stage of the matter;
- any imminent deadlines or hearings;
- how easy it will be for the client to find another solicitor;
- the client’s vulnerability or circumstances;
- any contractual notice provisions; and
- the risk of prejudice to the client.
Where court proceedings are involved, terminating shortly before a hearing is unlikely to be reasonable unless the facts are exceptional. In the costs on account case study, the SRA says that if a hearing is imminent, it would expect the notice period to expire after the hearing has taken place.
The SRA also suggests that, where appropriate, the notice should include a proposed way forward. For example, the firm might say that it will continue acting if the client pays the outstanding amount by a specified date. That gives the client a clear choice and helps show that the firm has not acted abruptly.
The SRA Principles and Codes
Terminating a retainer can engage several professional obligations.
Principle 2 requires solicitors and firms to act in a way that upholds public trust and confidence in the profession.
Principle 4 requires honesty.
Principle 5 requires integrity.
Principle 7 requires solicitors to act in each client’s best interests.
Those duties do not end the moment the firm decides it no longer wants to act. The firm still needs to communicate clearly, avoid unnecessary prejudice and handle the transition professionally.
There may be cases where the firm cannot give the client the full reason for termination, for example because of tipping off concerns or a risk of serious harm. Even then, the decision-making should be recorded internally.
Regulatory risk and accountability
The SRA says it may have regard to the guidance when exercising its regulatory functions. That does not mean every departure from the guidance is automatically misconduct. But if a client complains, or the matter later comes under scrutiny, the firm will want to be able to show that it considered the guidance and acted reasonably.
The common risk areas are:
- ending the retainer too close to a deadline;
- not recording the reason for termination;
- using vague or overly aggressive wording;
- failing to consider the client’s circumstances;
- failing to help with handover where appropriate;
- confusing commercial frustration with good reason; and
- assuming that a broad termination clause in the engagement letter is enough.
Practical steps for firms
Firms should have a simple process for ending retainers.
First, review the reason. Is there a genuine good reason? Is it supported by the engagement terms, common law and regulatory obligations? Has anyone else in the firm reviewed the decision?
Secondly, record the decision. The file note should explain the reason for termination, the notice period, the client risks considered and any mitigation steps.
Thirdly, communicate clearly. The client should be told in writing, in a way they can understand, when the retainer will end and what they need to do next. The wording should be professional and measured.
Fourthly, manage the handover. Where appropriate, tell the client about deadlines, confirm they can instruct another firm, transfer papers promptly and assist the replacement solicitor so far as you properly can.
Fifthly, review your own templates. Engagement letters should contain workable termination provisions, but they should not suggest that the firm can terminate for any reason at any time regardless of the common law or SRA position.
Finally, keep track of retainers that have been terminated early – either by the firm or by the client. Are there any risk areas that the COLP and COFA should be concerned about? Are there any trends or patterns emerging?
What this means for COLPs and supervisors
For COLPs, this guidance is a useful prompt to check whether the firm has a proper process for retainer termination.
It should feed into:
- terms of business;
- file closure and disengagement procedures;
- complaints handling;
- litigation supervision;
- training on difficult clients;
- AML and sanctions procedures; and
- risk registers.
The training point is particularly important. Fee earners need to understand that ending a retainer is not just an admin step. It is a point at which contractual rights, professional duties, client care, equality law and risk management all meet.
Handled well, termination protects the firm and the client. Handled badly, it can turn an already difficult matter into a complaint, a negligence issue or a regulatory problem.
So, can we stop acting for this client?
It is a question compliance teams hear all the time.
Sometimes the problem is non-payment. Sometimes the client has become abusive. Sometimes instructions have dried up. Sometimes the client wants to run an argument you do not think can properly be put before the court. And sometimes the firm has simply had enough of dealing with an awkward person.
The SRA’s new guidance on terminating retainers is a useful reminder that “we no longer want to act” is not the correct test.
The starting point is still good reason and reasonable notice. That sounds simple, but in practice it is where firms can come unstuck. A broad clause in your terms of business will help, but it will not override the common law or your regulatory duties. Nor will it rescue a decision that leaves the client exposed at a critical point in the matter.
