Mar 3

Caselaw Review: Gaynor v Central West London Buses Ltd – Work Carried out Before CFA Signed is Recoverable

Posted in Caselaw Review, Conditional Fee Agreements

The Issues: The Claimant retained solicitors to pursue her personal injury claim. Their retainer letter to her said: “If your claim is disputed by your opponent and you decide not to pursue your claim then we will not make a charge for the work we have done to date.” No CFA was ever signed. Did this retainer letter amount to a Conditional Fee Agreement so as to be caught by Section 58 of the Courts and Legal Services Act 1990 and therefore unenforceable because it did not comply with that Act or the CFA Regulations in force at the time?

Held: Section 58 defines a CFA as an agreement to provide litigation services. Section 119 of the same Act provides that this must relate to “contemplated proceedings”. No proceedings can be contemplated before a Defendant indicates a dispute. Work prior to there being a “real likelihood” of proceedings was not “litigation services”. The retainer was not a CFA, and the costs incurred under it could be recovered from the Defendant.

Comment: This is important authority from the Court of Appeal which will normally allow a Claimant to recover the cost of preliminary work carried out at the early stage of a claim before a CFA is entered into – including disbursements and an After the Event Insurance policy. It may also assist in recovering costs where an informal “No Win No Fee” agreement is mistakenly entered into. Alternatively, it may be possible to enter into a retrospective CFA which covers previous work – see Forde v Birmingham CC (2009).

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Feb 23

Caselaw Review: Metcalfe v Clipston – Notice of Funding not Mandatory Before Proceedings Issued

Posted in Conditional Fee Agreements, General, Practice & Procedure

The Issues: This dental negligence claim was settled without the issue of Court Proceedings, but the Defendants argued that the Claimant was not entitled to recover a success fee on the basis that they had not been given information regarding funding. Could the Claimant recover any of the success fee given the failure to notify the Defendant about the existence of a CFA; if not, could he obtain relief from the sanction imposed by CPR 44.15?

Held: The Pre Action Protocol for the Resolution of Clinical Disputes applied to this case. That Clinical Disputes Protocol was in turn governed by the Practice Direction in relation to Protocols (“PDP”) which at Paragraph 4 provided:

“A.1 Where a person enters into a funding arrangement within the meaning of rule 43.2(1)(k) he should (emphasis added) inform other potential parties to the claim that he has done so.”

Under section 19.2(5) CPD there is no requirement for any funding information to be provided before the commencement of proceedings. The effect of this, therefore, is that once proceedings are started there is an absolute requirement for the Claimant to provide funding information if he is to recover a success fee, but there is no such requirement before the issuing of proceedings (Para.45).

The Defendants had argued that the PDP required the Claimant in a clinical negligence case to notify a Defendant when a CFA was entered into. But, the Court disagreed, construing the word ‘should’, within the PDP, to mean ‘ought to’ and not ‘has to’ or ‘must’ (Para 49.). The requirement to provide funding information, pre action, is optional and not compulsory and therefore the Claimant could recover a success fee.

Comment: Although this was a clinical negligence matter the Personal Injury Pre Action Protocol is worded in similar terms. Para 3.2 of that Protocol states:

“…Where the case is funded by a conditional fee agreement (or collective conditional fee agreement), notification should (emphasis added) be given of the existence of the agreement and where appropriate, that there is a success fee and/or insurance premium, although not the level of the success fee or premium.”

Therefore the above decision is applicable to personal claims generally, and there is no requirement to provide funding information before proceedings are issued. However, it is recommended and may be best practice to do so.

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Feb 17

Caselaw Review: Garbutt & Anor v Edwards & Anor – Breach of code of conduct does not invalidate CFA

Posted in Caselaw Review, Conditional Fee Agreements, Practice & Procedure

The Issues: In breach of the Law Society’s Code of Conduct, solicitors for the successful Claimant had failed to provide that Claimant with regular costs estimates. The defendant argued that the Solicitors’ Code of Conduct had statutory force (because it was contained in a Statutory Instrument) and any failure to comply was therefore a breach of the law which rendered any retainer unlawful and unenforceable.

Held: that while the Code of Conduct did indeed have statutory force, it was not intended to be utilised by a Defendant to avoid their proper obligation to pay costs including any After the Event Insurance policy. The Code provided instead for disciplinary action against a solicitor and a monetary award in favour of the solicitor’s client, if necessary. If a breach of the Code could be shown by a paying party to have caused an actual increase in costs, then a costs judge had the discretion to disallow that increase, but this was very different from disallowing all costs.

Comment: In November 2005 the CFA Regulations were repealed and CFAs signed after that date were governed only by the Solicitor’s Code of Conduct which was amended to control how solicitors dealt with CFAs. The Court of Appeal’s clear decision is that any breach of the Solicitors’ Code of Conduct will not cause costs to be wholly disallowed, so a failure to follow the Code of Conduct after November 2005 will not have the same consequences as a failure to follow the CFA Regulations which applied to pre-November 2005 CFAs.

The relevant parts of the Solicitors’ Code of Conduct are Rules 2.03 (1), (2) & (3) at: http://www.sra.org.uk/solicitors/code-of-conduct/195.article

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Dec 16

Caselaw Review: Crane v Canons Leisure Centre – Success Fee on Costs Draftsman’s Fees

Posted in Conditional Fee Agreements, Practice & Procedure

The Issues: The parties could not agree costs and the matter proceeded to detailed assessment. The claimant’s solicitors instructed costs consultants, acting under delegated authority. Could the work carried out by the costs draftsmen be considered profit costs, and therefore a success fee be applied and recovered, or were their fees simply a disbursement.

Held: The costs draftsmen were doing work which the solicitors had undertaken to their client to do (para 15). It was solicitor’s work and had they carried out the work themselves then the solicitors would have been able to charge and recover a success fee. In theory, the solicitors remained liable to the claimant for any negligence in the conduct of the costs assessment. There are cases where work done by “outsiders” has been held to have been done, for costs purposes, as a fee earner for the solicitor, e.g. when a solicitor engages another solicitor such as when a London agent acts for a solicitor out of London. LJ May did not think that the classification of the cost of this type of work could sensibly depend on whether the solicitor did the work themselves, whether they delegated the work to another firm of solicitors or whether they delegated it to costs draftsmen who were not solicitors. As an alternative the defendant argued that the success fee of 45% should be significantly reduced because there was little or no risk in proceeding to detailed assessment after the claim had been won and any success fee should therefore have been reassessed. However this argument was not accepted on the basis that a single agreed success fee had to be looked at with the knowledge known at the time the success fee was set, without the benefit of hindsight (para 16), and further the Court has no power to direct that a success fee is recoverable at different rates for different periods of the proceedings (para 17). In the circumstances, the appeal was allowed and the claimant recovered a success fee of 45% for the work carried out by the costs draftsmen.

Comment: This case can assist firms to improve their profitability because a success fee can validly be charged on costs draftsmen’s fees. To do so, it would be best to ensure that:

  • The draftsmen’s fees are treated as a firm overhead and paid from the nominal account rather than added to the client’s ledger as a disbursement.
  • The client should be charged for the time taken (which obviously needs to be recorded by the costs draftsman) at the appropriate hourly rate – normally grade C or D.
  • It may be prudent for the solicitor’s client care letter to include a statement that the firm can outsource certain tasks from time to time but that the client would be charged for the work at the solicitor’s hourly rate as though the work had been undertaken by the solicitor themselves.

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Nov 3

Caselaw Review: Ashley Cole v News Group Newspapers

Posted in Conditional Fee Agreements

The Issues: During the course of a detailed assessment, the Defendant asked to see the Claimant’s Conditional Fee Agreement (CFA), although the Defendant had not at that stage raised any specific point regarding it – they simply wished to see it.

Held: The Court’s power to order disclosure (rule 47.14 CPR and Para 40.14 of the Costs Practice Direction) did not arise until after Detailed Assessment had commenced and the paying party had first raised a “genuine dispute” on the CFA. If a “genuine issue” is raised, the ‘Pamplin procedure’ will apply. (Pamplin -v- Express Newspapers Ltd [1985] 1 WLR 689 – since a CFA is a privileged document between solicitor and client, the Court has no power to force disclosure of it. If a Defendant raises an issue the Claimant can decide whether to disclose the CFA to prove his case. If the Claimant does not disclose the CFA the Court can take account of the fact that the Claimant may have a legitimate interest in not disclosing the CFA).

Comment: In Hollins v Russell (2003) the Court of Appeal indicated that CFAs should normally be disclosed (although the Defendant still had to raise a genuine dispute before taking matters any further). Hollins was decided however when the CFA Regulations were in force (pre November 2005). At that time there were many possible ways in which a Claimant’s solicitor might slip up and fail to enter into a valid CFA, and it appears that the Court had this in mind when deciding that CFAs should be disclosed. The Master in this case did not specifically decide on whether Hollins applied to CFAs signed after November 2005, however such CFAs need now only be in writing (Section 27 Access to Justice Act 1999), in order to be valid – the other procedural requirements were all repealed in 2005. This being so, Counsel for the Claimants certainly argued that once the Claimant confirms that the CFA is in writing, it is difficult to envisage how a genuine issue could be raised on it, and it is therefore unlikely that a CFA signed after November 2005 would ever need to be disclosed.

It is also relevant to note that CFAs signed under the regulations contained much more sensitive information than those used after November 2005 (for example they contained details of the solicitor’s interest in any ATE policy they recommended). Claimant solicitors were therefore quite rightly reluctant to disclose a document which would simply provide the Defendant with ammunition for a potential challenge. Since CFAs used after November 2005 are unlikely to contain information which Claimant solicitors would be reluctant to disclose (certainly those based on the standard Law Society model) the question of whether or not to disclose the CFA is much less sensitive.

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