Is your Retainer giving you a false sense of security?

The recent decision in Convrgnt Value Engineering -v- Kennedys Dubai LLP [2026] EWHC 1754 (Ch) highlights the need for professionals to give careful consideration to the terms of a Retainer, particularly to those provisions concerning governing laws and limitations of liability.

In this case, although the contract contained an express jurisdiction clause, the Court held that this alone was insufficient to establish that the Dubai-based Retainer was governed by the law of England and Wales. Consequently, the Unfair Contract Terms Act 1977 ("UCTA") was not engaged. The judge went on to observe, obiter, that even if UCTA had applied, the contractual limitation of liability (“liability cap”) would have failed the statutory test of reasonableness.

Background

Convrgnt Value Engineering ("CVE") commenced professional negligence proceedings against their former solicitors, Kennedys Dubai LLP ("KD") alleging failure on the part of KD to recover damages in excess of £15.8 million in an underlying claim between CVE and a former client in 2013.

By way of background, CVE instructed KD to act on its behalf to resolve a dispute which arose in connection with a substantial residential construction project in Dubai. In 2014, CVE recovered AED 22.68 million (£4.6 million), together with interest and the return of a performance bond. However, CVE subsequently contended that significantly greater sums should have been recovered in those proceedings, leading to the professional negligence claim against KD.

KD denied liability and sought to rely on their liability cap of £3 million however, CVE disputed the liability cap and alleged that it was unreasonable in accordance with the UCTA. The Court had to determine whether UCTA had jurisdiction over the Retainer in order to come to a view in respect of the liability cap.

While the Retainer stated that it should be governed by and construed in accordance with the laws of England and Wales, the Court applied the Rome I Regulation and held that UCTA did not apply because the contract was manifestly more closely connected to Dubai. Therefore, KD was entitled to rely on the £3 million liability cap.

Interestingly, the judge clarified that had UCTA applied, the liability cap would have been deemed unreasonable for three key reasons:

1. Ability to meet the Liability: The judge determined that KD had sufficient resources to satisfy any award made against it.

2. Level of Insurance Cover: Although KD had not expressly disclosed its level of professional indemnity insurance, the evidence suggested that it held cover of up to £30 million, indicating that the £3 million liability cap was unjustifiably low.

3. Potential Value of the Claim: The judge considered the amount that CVE could reasonably have expected to recover, together with any potential adverse costs liability and concluded that any recoverable sum was likely to be significantly higher than £3 million, making the cap appear inadequate.

Conclusion

This case underscores the importance of carefully considering both the level and wording of liability limitation clauses at the outset of a Retainer to ensure that same are reasonable and justifiable as Courts may look critically at liability caps that appear arbitrary or disconnected from the value and risk profile of the engagement.

Key Takeaways

i. Solicitors/professionals should not assume that an express jurisdiction clause will, on its own, determine the governing law of a Retainer.

ii. Solicitors/professionals should be mindful that when determining the legitimacy of a liability cap, a judge may consider the scale of the underlying dispute and the firm's level of professional indemnity insurance cover.

iii. Solicitors/professionals should be prepared to justify how their respective liability caps have been calculated.

If you would like any further information or advice, please contact Rebecca Kelly from our Professional Negligence team.

*This information is for guidance purposes only and does not constitute, nor should be regarded as, a substitute for taking legal advice that is tailored to your circumstances.