Kerry Underwood

CONDITIONAL FEE AGREEMENTS: SOLICITOR’S RIGHT TO END WHEN ADVICE RE SETTLEMENT NOT TAKEN

leave a comment »


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

Butler v Bankside Commercial Limited [2019] EWHC 510 (QB) (07 March 2019)

the High Court considered the meaning of a Conditional Fee Agreement incorporating the following term:

What happens when this agreement ends before your claim for damages ends?

(b) Paying as if we end this agreement

…(iii) We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:

• Pay the basic charges and our disbursements, including barrister’s fees;

• Pay the success fee if you go on to win your claim for damages.”

Here, the claimant was a firm of solicitors and the defendant was a commercial agent, and a former client of the claimant firm, which acted for it against Nikon under a Conditional Fee Agreement with the above wording.

Nikon offered €90,000 to settle the claim, which offer was not accepted.

The solicitors subsequently wrote to the client “in strong and very detailed terms, that a counter-offer of €90,000 plus 50% of costs should be made”.

The client rejected that advice, resulting in the solicitors terminating the retainer on the ground, among others, that the client’s refusal to follow the firm’s advice amounted to a rejection of its opinion about making a settlement under 7(b)(iii) above.

The client went continued on its own, but was awarded only £40,636.80 with a costs order not entirely in its favour.

The solicitors agreed to limit their costs to the sum of costs awarded to the client, namely £238,527.29, resulting in the client having to pay nothing out of its own pocket.

The defendant argued that the clause only covered where the offers of settlement from the other side should be accepted, and not its failure to take the solicitor’s advice concerning making an offer of settlement.

The Master, and the High Court on appeal, rejected that submission.

The solicitor’s opinion was about making a settlement with the client’s opponent and the client had rejected that opinion.

The court said that it was satisfied that the suggestion that any opinion about “making a settlement” being construed as limited to the consideration of the acceptance of any offers made by the opponent was inconsistent with the language of the clause and would, in any event, lead to procedural distinctions devoid of either logical justification or practical coherence.

The judgment is also significant in that it recognises the risk that solicitors are taking when acting under a Conditional Fee Agreement, and recognises that those solicitors are entitled to a degree of protection against unreasonable clients.

“ 21. Where there is no CFA, the client’s privilege of ignoring her solicitors’ advice, so long as they can continue to act within the boundaries of their professional duties, is preserved intact.

22. Where, however, there is a CFA under which the solicitors, themselves, face significant economic risks in the event of an adverse result at trial, one would not expect the level of protection which they are afforded against the whims of the unreasonably optimistic client to turn upon the random happenstance of whether or not the other side has made an approach which can be categorised as a contractual offer capable of acceptance. For such solicitors to be required to wait, like Vladimir and Estragon, for an offer from the other side which might never come rather than, where appropriate, to take the initiative in negotiations would impose artificial and unjustifiable limits on their ability to protect their own legitimate interests.”

Advertisements

Written by kerryunderwood

March 12, 2019 at 10:57 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: