Kerry Underwood


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In Vilvarajah v West London Law Ltd [2017] EWHC B23 (Costs)

the Senior Courts Costs Office held a Conditional Fee Agreement to be unenforceable as between solicitor and client as it was unfair and unreasonable within the meaning of Section 61 of the Solicitors Act 1974.

This was for a number of reasons and my blog – Hourly Rates in Retainers – deals with the issue of the hourly rates.

It has been established since

In re Stuart, ex parte Cathcart [1893] 2 QB 201

that the issue of fairness is confined to looking at how the agreement was entered into, whereas the issue of reasonableness is confined to the contents of the agreement.

Section 61(2)(b) of the Solicitors Act 1974 allows the court to set aside a Contentious Business Agreement and order the costs covered by it to be assessed as if it had never been made if the agreement is in any respect unfair or unreasonable.

In In re Stuart, applying a similar provisional in the Attorneys’ and Solicitors’ Act 1870 the Queen’s Bench Division of the High Court said:

“… if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the request as to fairness…”

and that that the solicitor must satisfy the court that “the agreement was absolutely fair with regard to the way in which it was obtained…”
Here the solicitor’s attendance note in relation to the Conditional Fee Agreement read:

“Attending client in our offices. Went through the CFA with him before he signed the same. He is acceptable to the same in that he is liable for barrister’s fees. I will find out how much the barrister’s fee will be for the forthcoming hearing on Friday. Time: 5 units.”

The judge pointed out that five units is 30 minutes and continued:

“18. At paragraph 8 of her statement Miss Yarranton recorded that she explained to the Claimant what a conditional fee agreement was, that the Defendant would be paid win or lose, “but that the rate payable would be considerably less if the claim failed”, what the different rates were, that a success fee would be payable “if the claim was successful” and that the Claimant would be liable for counsel’s fees. At paragraph 11 she stated that she could not recall whether she gave the Claimant a copy of the agreement at the meeting but “would usually do so”.

19. In relation to the Claimant’s understanding of English Miss Yarranton stated, at paragraph 23, that “it is relatively obvious that English is not his first language” and accordingly she took particular care to explain things thoroughly. At paragraph 30 Miss Yarranton explained that the Claimant had been unable to continue to fund the matter under a conventional retainer and that:

The Defendant was only prepared to act on the Claimant’s behalf under a CFA on the terms offered and the Claimant was fully aware of this.”

The judge held that the client did not fully understand and appreciate the agreement and said this about what should have happened:

“25. …There is no correspondence between the Defendant and the Claimant about the conditional fee agreement. I would expect to see a letter from the Defendant to the Claimant in advance of the meeting on 7th January 2013 explaining the options clearly. I would expect that letter or a subsequent letter, still in advance of the meeting, to enclose a draft of the proposed conditional fee agreement and to explain its terms so that the Claimant would have an opportunity to consider it before the meeting and think about whether there was anything which required explanation. I would expect the solicitor to be able to produce an attendance note of the meeting at which the agreement was signed recording precisely what explanation she gave of it to the Claimant. I would then expect to see a letter sent to the Claimant after the agreement was signed enclosing a copy of the agreement and explaining the key points.”

The judge said that no Risk Assessment was carried out and there was nothing to suggest that the client had been given any advice as to the prospects of success in the case and therefore the likelihood that he would have to pay a substantial success fee in addition to the primary rate.

On the point the judge concluded:

“28. I cannot conclude that an explanation given in a 30 minute appointment, with no attempt at communication before or after, enabled the Claimant fully to understand and appreciate the terms of the agreement and in particular the liabilities that he was assuming.

29. Accordingly in my opinion the agreement is unfair and should be set aside.”

Thus here the court set aside a Conditional Fee Agreement, even though the solicitor had in fact seen the client and spent 30 minutes explaining the agreement. It is clear from the paragraphs quoted above that the judge felt that a 30 minute appointment, with no communication before or after, was insufficient to explain the Conditional Fee Agreement.

In personal injury matters, very many solicitors never see the clients and virtually all such claims are conducted under a Conditional Fee Agreement.

You can assume that if a client challenges such an agreement under Section 61 of the Solicitors Act 1974, then in the absence of a personal meeting between solicitor and client the Conditional Fee Agreement will be voided by the court.

Written by kerryunderwood

July 11, 2017 at 8:55 am

Posted in Uncategorized

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