Kerry Underwood

CONDITIONAL FEE AGREEMENTS: NO WIN, LOWER FEE: LUMP SUM DISCOUNTED FEE: PAYMENT OUT BY COURT IN FRAUD LITIGATION

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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.

The consultancy includes the drafting of Funding Agreements, including the type of Conditional Fee Agreement used in this case, and Kerry Underwood has written over 50 different types of Conditional Fee Agreements.

In

Skatteforvaltningen (The Danish Customs And Tax Admin) v Solo Capital Partners LLP & Ors [2020] EWHC 2161 (Comm)

a fraud case where where both the claimant and some defendants claimed a proprietary interest in monies held in court, the Commercial Court allowed the defendants a limited payment for legal fees, balancing the competing interests by adopting an approach that reduced the risk of the funds being exhausted by payments of legal fees which exceeded those reasonably incurred to date.

The defendants’ legal team were retained on a no win lower fee conditional fee agreement with an agreed total discounted base fee which became due on signature of the Conditional Fee Agreement, which contained rights of termination for non-payment.

Applying

Marino v FM Capital Partners [2016] EWCA Civ 1301

and

Kea Investments Ltd v Watson [2020] EWHC 473 (Ch),

the court had to ascertain whether the defendants had access to other assets to meet legal fees and, if not, weigh the apparent injustice of releasing the funds against the possible injustice to the defendants of not doing so.

The defendants currently had access to no other assets, but certain assets, not subject to legal restraint, might be liquidated over the next 18 months.

The court declined to order payment out of the entire sum due under the Conditional Fee Agreement, as this would immediately be consumed, regardless of the reasonable value of the work done to date.

One of the defendants’ investments was maturing in January 2021. The judge therefore ordered payment out of a sum to cover certain outstanding fees and incurred costs, plus the estimated legal costs to be incurred under the Conditional Fee Agreement, calculated on a conventional charging basis, up to 31 January 2021, plus disbursements outside the Conditional Fee Agreement.

Although the judge did not know what effect his order would have on the defendants’ legal team’s willingness to continue under the Conditional Fee Agreement, that did not lead him to conclude that the balance of interests he had struck was unfair.

The defendants’ Conditional Fee Agreement was “an unconventional mechanism to funding High Court litigation” and the contractual terms agreed between the defendants and their lawyers could not be allowed to trump the court’s decision.

 

Comment

An interesting example of an extremely substantial piece of litigation described by the court as “one of the largest and most complexed pieces of litigation to be heard in the Commercial Court” being dealt with by way of a conditional fee agreement.

It is also an interesting example of a defendant being represented under a Conditional Fee Agreement and, unsurprisingly, on a no win, lower fee basis, a model that I recommend in commercial proceedings.

It is further interesting in that the lower fee is calculated as a lump sum, rather than by work done, and again this is very much my model for acting on a No win, Lower fee Conditional Fee Agreement for a defendant.

Written by kerryunderwood

August 18, 2020 at 8:55 am

Posted in Uncategorized

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