Kerry Underwood

CONDITIONAL FEE AGREEMENT DOES NOT SURVIVE SOLICITOR CEASING TO ACT

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The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Roman v AXA Insurance PLC – Central London County Court Case B 90 YJ 688

a Circuit Judge held that a Conditional Fee Agreement with a firm of solicitors ended when that firm stopped acting, as they were closing their department, causing the claimant to instruct other solicitors.

The claimant was injured in an accident on 7 May 2012 and entered into a Conditional Fee Agreement with Secure Law, with a success fee of 100% and that firm issued proceedings on behalf of the claimant, but in November 2015 they advised the claimant that her file would be transferred to another firm.

Notice of change was given and the action to settle in the claimant’s favour.

On detailed assessment the issue arose as to whether the claimant had elected to treat the original Conditional Fee Agreement as continuing after she had entered into a new agreement with the second firm of solicitors.

If the original Conditional Fee Agreement continued, then the first firm of solicitors were entitled to be paid for the work that they had done, but if it did not continue then the claimant had no obligation to pay and, under the indemnity principle, the defendant did not have to pay the costs of the first solicitors.

At first instance a Deputy Master held that the claimant had elected to treat the Conditional Fee Agreement as continuant, but on appeal to the Circuit Judge, that decision was overturned.

Here the court distinguished the Court of Appeal’s decision in

Budana v Leeds Teaching Hospitals NHS Trust (Law Society intervening) [2018] 1 WLR 1965

on the ground that here, unlike in Budana, the original Conditional Fee Agreement did not remain in place following the claimant’s instruction of the new firm.

At Paragraph 19 of the decision, the Circuit Judge set out five points, dealing with the facts of the case and the law as follows:

“i)  The conditional fee agreement entered into by the claimant with Secure Law was clearly on the authorities an entire contract and was accepted to be an entire contract by the claimant.

ii) The letter from Secure Law sought to terminate the conditional fee agreement entered into by the claimant with Secure Law because Secure Law’s relevant department ceased to exist with the restructuring of their personal injury and clinical negligence teams. That was not a permitted circumstance for ending the conditional fee agreement under the Law Society document ‘What You Need to Know About a CFA’ so as to entitle Secure Law to payment. The letter from Secure Law to the claimant was a repudiatory breach of the conditional fee agreement entered into by the claimant with Secure Law.

iii) The letter from Secure Law to the claimant indicated that Lime’s agreement with the claimant would be “on the same basis as was agreed by Secure Law”, while the letter from Lime to the claimant stated that their agreement with the claimant would be “on the same terms that you had with Secure Law Limited”. Neither letter suggested that the conditional fee agreement entered into by the claimant with Secure Law would continue if the claimant’s case was transferred to Lime. On the contrary, the letter from Lime to the claimant made it clear that she would have to enter into a new conditional fee agreement with Lime before they could act for her.

iv)  The claimant accepted the repudiatory breach of the conditional fee agreement entered into with Secure Law by proceeding to instruct Lime and entering into a new conditional fee agreement with Lime.

v) Unlike in Budana, the parties did not take any steps with a view to the conditional fee agreement entered into by the claimant with the first firm Secure Law continuing to subsist. There was no affirmation by the claimant of the conditional fee agreement with Secure Law, as there was in Budana by the second deed in that case and Ms Budana’s conduct more generally. As Gloster LJ said, the terms of the documentation in Budana clearly showed that Ms Budana did not elect to terminate her contract with the first firm of solicitors but instead decided to preserve and transfer it. That is not the position in the present case.”

In my view the Circuit Judge is correct in relation to all of these matters.

At Paragraph 21 the judge then deals with additional grounds relied upon by the claimant as follows:

“i) There was no waiver by the claimant of the right to treat the conditional fee agreement with Secure Law as terminated. The claimant accepted the repudiatory breach of the conditional fee agreement with Secure Law by instructing Lime and entering into a new conditional fee agreement with Lime.

ii) The claimant did not accept the partial performance by Secure Law and her liability to pay for such partial performance. It was an entire contract. There was no term in the conditional fee agreement with Secure Law entitling them to payment for partial performance.

iii) The case of Budana did not find that there was an implied term in the conditional fee agreement in that case that it could be terminated for good reason, with the solicitors to be entitled to payment. There is a much more limited right of termination on the part of solicitors in the Law Society document ‘What You Need to Know About a CFA’, where the solicitors are still to be entitled to payment. Further, as the defendant says, the reason that Secure Law chose to end their conditional fee agreement with the claimant had nothing to do with the conditional fee agreement or the claim, it being a commercial decision by Secure Law to close the department. “

In my view this decision is entirely correct, and rather clearer than some of the decisions given by the more Senior Courts.

I would wouldn’t I, as I get a favourable mention in the judgment 😊

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Written by kerryunderwood

February 19, 2019 at 7:25 am

Posted in Uncategorized

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