One of the issues that is currently under the spotlight, is whether a conditional fee agreement can effectively be assigned between solicitors firms. This issue might arise, in the context of a firm selling its work, becoming insolvent, and the work being sold off by a liquidator to another firm, or more mundanely a solicitor simply moving firms and taking the client with them.
The point matters, because to be able to transfer a pre-1st April conditional fee agreement, and retain the recoverable success fee within that agreement, could be far more profitable, than having to make a new conditional fee agreement, with the new firm of solicitors. Conversely, for a paying party, being able to limit the duration of the original conditional fee agreement, would generate an opposing financial benefit.
The starting point is to note that a contract between a solicitor’s firm and its client, might fall within that category of contracts apt to be described as personal contracts. It is a contract for the solicitor’s firm to provide a service personally to the Claimant. It is fundamentally different from a contract for the purchase of pork bellies or orange juice.
Chitty on Contracts 31st edition provides an overview of this area of law at paragraphs 19-054 to 19-055, and a number of decisions of high authority confirm that a personal contract is not capable of assignment: see in particular Griffith.v.Tower Publishing Company  1 Ch 21, Nokes.v.Doncaster Amalgamated Collieries Ltd  AC 1014 and more recently the restatement of principle noted in Crane Co.v.Wittenborg AS (Court of Appeal 21st December 1999).
If however, such a contract is capable of being assigned, then matters do not end there. Every contract contains what might be called benefits and burdens. Assignment, can the transfer of the benefit of an existing contract. but the general principle is that the burden of a contract is not capable of assignment, as burdens should not be imposed without consent. That is subject to a limited number of exceptions.
Where both parties to the existing contract and a new party agree that the new party should take over the benefits and burdens of a contract, that is not an assignment at all. Instead a novation has occurred. It is the rescission of the old contract and its replacement with a new one, on the same terms as the former contract, but with different parties.
The principles of novation are of long standing: see Southway Group Ltd.v.Wolff and Wolff  CLR 33 Bingham LJ at paragraphs 52-53 and Chitty on Contracts 31st edition at paragraphs 19-086 to 19-088.
In a true case of assignment, there is a limited exception where a burden can be transferred, the “conditional benefit” cases. This principle is often misunderstood: it provides that a burden can be transferred, where the requirements set out in the Davies.v.Jones  EWCA Civ 1164 case are satisfied: see the Vice Chancellor’s summary of principle at paragraph 27.
This formulation of principle is in turn derived from a chain of authority which disapproved a related principle devised in Tito.v.Waddell (No2)  Ch 106 the “pure principle of benefit and burden” including Rhone.v.Stephens  2 AC 310, and Thamesmead Town Limited.v.Allotey  EG 161.
The key to understanding the distinction, is that it is not enough that the benefit is provided in exchange for the burden being performed: that is true of every contract, whether it be for the fee paid for solicitors services, or price paid for the purchase of pork bellies.
Rather the receipt or enjoyment of the benefit must be relevant to the imposition of the burden, in the sense of being conditional or on reciprocal to the latter: in essence the narrow exception of “conditional benefit” is concerned with ensuring that qualifications on a benefit are transferred too.
Receiving parties however, start with the high ground in the arguments, namely the decision of Rafferty J in the case of Jenkins.v.Young Bros Transport Limited  1 WLR 3189. This is a decision of a High Court judge it is binding in the county court. The question then however, is what is its ratio decidendi that is binding?
The judgment does not purport to lay down a sweeping statement of principle that conditional fee agreements are assignable. It is limited to the peculiar facts of the case: see paragraph 31 of the judgment. The width of the ratio could be stated to be relatively narrow.
I also think that it is fair to say that the arguments for the receiving parties, do not begin and end with Jenkins; there are other points that could be made, when undertaking an analysis of these doctrines although those arguments are beyond the scope of this necessarily brief article.
Analysing the consequences of a non-effective assignment were this to be found at a hearing, I think the court would go on to find that any new firm acting for the receiving party would have made a new contract of retainer: I think the law would readily imply a contract of retainer, but this would be a novation.
On the basis that a novation took place, and all other things being equal, the terms and conditions of the retainer would be apt, to be those in the original conditional fee agreement.
But such an agreement made post 1st April 2013, must comply with the formality requirements of section 58(4)(d) of the Courts and Legal Services Act 1990 and articles 4 and 5 of the Conditional Fee Agreements Order 2013: including containing the statutory cap on the success fee. If it does not, the conditional fee agreement is unenforceable and no costs will be recoverable under it.