Solicitor and own client charging in personal injury matters

I seem to have spent the last couple of weeks since my return from holiday, advising upon and drafting retainers for personal injury matters. The practice of charging clients 100% success fees unrelated to risk and which are then paid by clients from their compensation,is wide spread within that part of the profession.

The questions that need to be grappled with in the aftermath of Herbert -v- H H Law Ltd (Final) are whether that remains a proper and prudent practice or whether it needs to be revised and if so, what a revised charging structure is.

In addition careful consideration needs to be given to the advice and explanations given to clients in order to be able to avail oneself of the presumptions that are contained in rule 46.9 CPR on any solicitor-own client assessment under section 70 of the Solicitors Act 1974.

The issue of charging practices was further brought into stark relief this month by the decision of the Divisional Court in Solicitors Regulation Authority v Good [2019] EWHC 817 (Admin) which unusually concerned an appeal by the SRA against a failure to find dishonesty and upon sentence. The report makes for grim reading. The court, allowing the appeal, and striking off the solicitor drew these conclusions.

77. In these circumstances, given that the appeal on Ground 1 will succeed, it is not strictly necessary to deal with Ground 2, but since it was fully argued, I will deal with it, albeit more briefly than Ground 1. In my judgment, even if Mr Good was not dishonest, but only guilty of the lack of integrity found by the SDT, the sanction of a £30,000 fine was excessively lenient and clearly inappropriate so that the Court should intervene and quash that sanction, substituting the sanction of striking off the Roll.

78. I have reached that conclusion for a number of reasons. First, even if Mr Greaney QC were right that the finding at [26] that the lack of integrity was of limited extent was a reference back to the fact that overcharging was limited to clinical negligence cases, this whole passage in the evaluation of the SDT as to the appropriate sanction does contain a miscalibration of the seriousness of the misconduct and downplays significantly its seriousness. On the basis of the strong and critical findings the SDT had made earlier in its judgment about the knowledge and deliberate misconduct of Mr Good, such as his deliberate setting of artificially high rates pursuant to a planned policy to seek inflated costs, his deliberate disregard of Practice Directions and decisions of costs judges and his knowledge that the rates and the success fee were excessive/grossly excessive, the SDT should have concluded that the lack of integrity was particularly grave.

79. Second, whilst it is correct that Emeana is not authority for the proposition that whenever the SDT makes a finding of lack of integrity the appropriate sanction is striking off, it is authority for the proposition that where the lack of integrity is particularly serious, as it is in the present case, the reputation of the profession is seriously undermined by the imposition of fines and that reputation will only be properly protected in such a case by the sanction of striking off: see per Moses LJ at [28] and [35]. Accordingly the sanction imposed by the SDT here of a fine was wrong in principle and excessively lenient and the sanction should have been striking off. That conclusion is not altered by the mitigation available to Mr Good to which I referred at [21] to [23] above.

80. Third, one of the reasons why, in my judgment, Mr Good’s misconduct was particularly serious, even if he was not dishonest, is that it is of paramount importance that the public and other members of the profession are able to have complete trust in a solicitor when it comes to statements or Bills of costs. Were it otherwise there would always be a risk that the paying party on a Bill, relying on the integrity of the solicitor rendering the Bill, would settle a Bill which was in fact excessive or grossly excessive, to the knowledge of the solicitor rendering the Bill. Contrary to what the SDT appears to have thought at [26], I consider that risk was always present in these cases.

81. The serious lack of integrity demonstrated by Mr Good in relation to the Bills of Costs he rendered completely undermined any such trust. In my judgment, in those circumstances, the maintenance of the reputation of the profession and public confidence in it, which Sir Thomas Bingham MR in Bolton described as the most fundamental purpose of the sanction for misconduct, require that the sanction imposed in the present case be the most serious one of striking off. I do not consider that the public would regard it as acceptable that someone who breached that trust in the way in which Mr Good did should be allowed to act as a solicitor.

There is a tension at work here, between a solicitor’s freedom to charge his client whatever the market will bear, and an almost quasi-Biblical concept of a “just price” for a piece of work. But on further reflection, the tension is capable of resolution by consideration of the surrounding circumstances.

High rates or large success fees may not themselves be dishonest charging practices: what can make them so is lack of transparency, breach of Practice Directions and seeking to impose unreasonable and disproportionate costs on paying parties who, not being clients, have no freedom of contract to bargain for a market rate.

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