Mission accomplished

The clocks have gone forward and British summertime  has arrived. The first tentative easing of Lock Down also begins today. The world is a little brighter, a little warmer each day and whilst deaths and hospitalisations are heading downwards, everything else is on an upward curve.

I have even had my own jab, and whilst disappointed not to wake up with super-strength and preternatural instincts, am pleased to note that the only symptoms were a sore arm and a headache.

An interesting article featured in the Law Society Gazette last week on a tranche of solicitor-own client assessments undertaken in Birmingham: 

https://www.lawgazette.co.uk/practice/cap-on-damages-amounts-to-informed-consent-court-rules/5107930.article.

Since 2013, the number of solicitor-own client assessments that I undertake has exploded: as well as the phenomenon of challenges to success fees and other deductions in personal injury claims I find that more and more commercial clients are raising issues with the costs they have been charged for litigation. The District Registries and the Senior Courts Costs Office appear to be getting ever busier with applications for assessments of costs under section 70 of the Solicitors Act 1974.

The Birmingham cases repay consideration because they raise a number of points which are “doing the rounds” in relation to that type of low value personal injury case, where often the amount sought by way of deduction is modest, but where in aggregate large sums may be at stake.

A number of these points are also points of law which would benefit from the analysis of the appellate courts: and the Birmingham cases with their analysis of the legal issues provide an interesting counterpart to the case of Belsner v Cam Legal Services Limited [2020] EWHC 2755 (QB) which was decided last year, and which has recently obtained permission to appeal to the Court of Appeal.

A particular point of interest, was the approach taken by the District Judge to informed consent in respect of deductions from damages, and also the construction to be given to section 74 of the Solicitors Act 1974 and rule 46.9(2).

In respect of informed consent he noted:

12. The issue which was placed front and centre before me in this context was that of informed consent, by which I mean each claimant client being aware of the terms on which their solicitors would be paid in respect of claims undertaken on the claimant client’s behalf and their potential liability to pay sums due to their solicitors from their damages, in the event that their claim succeeded. The claimants rely on the 2019 Court of Appeal decision in Herbert v HH Law and the 2000 High Court decision in the case of MacDougall v Boote Edgar Esterkin, in support of the proposition that informed consent requires a full and fair explanation of all of the issues and, the claimants say, to demonstrate that the simple fact of entry into a retainer contract is not enough to evidence informed consent.

The conclusion that he reached in respect of what needed to be explained to the clients and why was in these terms:

47. Having examined the retainer documentation in relation to these 15 assessments, I am satisfied that they all, allowing for the fact that the actual wording they use may vary from retainer to retainer, make clear that the client has a potential liability to pay fees over and above whatever may have been recovered on an inter partes basis. I pause at this stage to say that the comparison made by leading counsel for the Defendant between the wording of the retainer in these cases and the wording of the retainers, as I understand it as was approved in the case of Herbert, has some real force to it, in my judgment.

48. I am further satisfied that reference to these retainers all demonstrate that each of them contains a provision to the effect that the potential liability to which I have just referred is limited to a maximum of 25 per cent of the client’s award of damages, irrespective of how the sums being deducted might be categorised. There have clearly historically been retainers which have not made provision for a cap and it seems to me there has been previous litigation involving such retainers. However, that is not, I find, the situation in this case. The fact of the existence of a cap has a magnetic attraction to me, in the context of the concept of informed consent, for the purposes of these assessments.

49. Being told that there is a cap, and what that cap might be, is more than sufficient information, in my judgment, for the purposes of obtaining informed consent from a client for deductions to be made from their award of damages. I readily accept that there are, at the start of pursuit of any personal injury damages claim, multiple possible outcomes as to the level of damages received by the client and the reasons why that level of damages was either awarded or achieved through a negotiated settlement. It would be an impossible task, in my judgment, for a solicitor to provide a client with specific advice as to every scenario and every level of damages which might be awarded and the impact that such an award would have on the sums which the solicitors say could be deducted from the award of damages.

50. In my judgment, the realistic and pragmatic approach to the way in which this issue could be managed is for the client to be made aware of their potential maximum exposure to a deduction from damages. At the outset of a personal injury damages claim, which is the point in time in the process which we are considering in the context of informed consent for these purposes, it is, of course, impossible for the solicitor to know with any degree of certainty what level of damages might be awarded to, or agreed on behalf of, that particular client in respect of that particular claim. It clearly would not, therefore, be possible to put a precise figure on the exact monetary amount which might be deducted from the damages by the solicitor.

He did not think much of the argument that when negotiating her own fees, a solicitor owes a fiduciary duty to a putative client:

55. As to the third part of my decision in respect of point of dispute one, I move on to consider the issue of the existence of any potential breach of a fiduciary duty between solicitor and client, in the context of these retainers. Here, I can do little more than respectfully repeat and adopt the submissions made to me on this issue by leading counsel for the defendant. In my judgment, his analysis of when a fiduciary duty arises between a solicitor and a new prospective client is correct, particularly when he highlights the basis upon which he concludes that a fiduciary duty cannot arise whilst the process of negotiating the terms of the retainer relating to the solicitor’s remuneration remains ongoing. Therefore, I can see no basis on which any issues concerning a potential breach of any fiduciary duty could assist any of these claimants in the context of these assessments.

The second point of particular interest relates to the construction given to section 74(3) of the Solicitors Act 1974 and its relationship with rule 46.9(2):

57. However, further and in any event, irrespective of the conclusions which I have reached in respect of the narrow application of section 74(3), there is a further point which weighs heavily and, in my judgment, conclusively in favour of the defendant in respect of this issue. I accept the submission from the defendant that CPR 46.9(2) disapplies section 74(3). I am inevitably drawn to that conclusion, in my judgment, given my earlier findings as to the basis on which the retainers – which are, I am satisfied, written agreements for CPR 46.9(2) purposes – put in place an arrangement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.

This is a welcome conclusion, for any solicitor who has utilised the Law Society model CFA, or based their own retainer upon it.

I suspect that these cases will proceed to an appeal: there are a number of points of law here that whilst overlapping with the Belsner case are distinct from it, and it should be noted that the District Judge distinguished Belsner, from applying to the case before him, on the basis that the retainer in that case lacked the 25% cap, the presence of which in these cases played such a crucial part in his decision.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: