Solicitor costs related to buying a business

wr0ni4k

Hi, 

Last week I reached out to the solicitors in my area as I was looking to purchase a local shop. Everything was looking good until we discovered some discrepancies with the P&L statements sent to us by the seller a few days ago so we had to call off the deal. 

Prior to this, with the solicitor I discussed the options of lease (for instance, the benefits of a new lease or getting assigned to the one the previous owner had with the landlord). As things were looking positive till then, I asked the solicitor that I intended to go ahead with a new lease option and the previous owner sent all the documentation to the solicitor. A few days ago I received an email by my solicitor providing a quote for the costs that I’d have incurred for the checks that she’d have performed. And she asked me to tell her which checks were required so she could proceed forward and carry them out. However, I didn’t reply to the email as I wanted to make sure I was satisfied with the purchase going ahead. 

Shortly after, I received an email with the solicitor contract highlighting all the costs that I’d have incurred for the purchase process. I didn’t sign anything, nor I replied back for the reason mentioned above. 

Today, I informed the solicitor of me not proceeding through with the purchase and I’ve been told that I need to pay roughly 1/3  of the total solicitors cost that I’d have paid in case of the purchase going through. She claims this is the abortive fee as some work has been carried out already. 

So am I liable to pay the abortive fee (about £800)? To summarise, the solicitor has reviewed the existing lease of the previous owner and few other documents related to the sale process. No checks have been carried out. I haven’t signed any contract with the solicitor, nor replied after receiving the contract. 

Jeremy535897

You should address this question to the solicitor rather than a forum. You not replying to her emails was the wrong thing to do, as you could have sent a one line reply to the effect that she was not to do anything until you gave instructions.

DullGreyGuy

You say you discussed options and so you've had advice so should be expecting to pay for something.

Signing contracts is generally unnecessary, if they believed you were intending to use them then they'd most likely have sent you a retainer or client care letter/email which gives their costs etc. Obviously this was the time to tell them that they were wrong and you were still considering your options. 

wr0ni4k said:
I asked the solicitor that I intended to go ahead with a new lease option and the previous owner sent all the documentation to the solicitor. 

You told them how to proceed and then had documents sent over... seems reasonable that they worked on them. The fact you've decided to pull out isnt their fault and so that's more costs you've reasonably incurred

As to the checks... there will be some mandatory checks, like ALM, and therefore as you said you intended to go ahead it would be reasonable for them to have commenced those. It may be a greyer area if some are advisory or discretionary and they'd commenced them without instruction. 

How many hours are they billing for or was it a fixed price job? 

tightauldgit

The solicitor should have provided you with some letter of engagement or similar spelling out their terms and conditions. Since you have instructed the solicitor to do work for you then you will have to pay their fees for that work, they shouldn't charge you for anything that you haven't instructed them to do however. 

DullGreyGuy

tightauldgit said:
they shouldn't charge you for anything that you haven't instructed them to do however. 

But this appears to be the crux of it.... solicitor said option A or B, the OP said they'll go for A so solicitor did work on A however OP now saying that wasnt an instruction but a conditional decision depending on if they decided to proceed. 

It will very much come down to exact wordings of any written comms etc