This Christmas cracker of a case/appeal involved “informed consent” and found that simply stating the Claimant is liable for costs not recovered from the Defendant is not sufficient.
The background to the case is that Ms Belsner (B) was injured in an RTA and instructed Solicitors (CAM) to act on her behalf. The CFA had no cap on base costs but an uplift capped at 25% of damages. The Client Care letter, T&Cs and CFA provided that CAM could charge fees in excess of those recovered from the Defendant however:
- They failed to provide any real detail of those circumstances
- It provided an estimate to the effect that “the basic charges for the work … will be £2,500.00”.
Liability was admitted in accordance with the Low Value RTA Protocol with damages agreed in the sum of £1,916.98. Fixed costs and disbursements in the sum of £1,783.19 were also paid by the Defendant.
The instructed Solicitor provided B’s damages to her in the sum of £1,531.48 (less £385.50 – 25% of damages).
B then requested a statute bill from CAM which contained the following charges, totalling £4,306.07 (inc VAT):
- Basic charges of £2,171.90 plus VAT
- A success fee of 100% of the basic charges, capped at 25% of the recovered damages
- The fee of £225 plus VAT for obtaining a GP report
- The fee of £806 plus VAT for obtaining a psychology report.
As CAM only recovered £1,783.19 for costs and disbursements from the Insurers, B was liable to pay to CAM the sum of £2,522.88 (£4,306.07 less £1,783.19). This would have extinguished B’s damages and left her liable to CAM for £605.90.
CAM agreed to limit the costs they sought from B to those recovered from the Insurers plus the success fee of £385.50. B thereafter issued a Part 8 Claim Form seeking an assessment of the profit costs and success fee elements of CAM’s bill.
CAM’s bill was initially assessed in the sum of £1,392 plus VAT and a success fee of £208.80 plus VAT on the basis that CPR 49.6(2) applied. Therefore, CAM was entitled to recover more from B than what had been recovered from the Insurers to the original claim.
B appealed arguing the CPR 46.9(2) should not apply as she had not given “informed consent”. It was argued that to provide informed consent, she should have been furnished with enough information to have a knowledge of her likely liability.
CAM argued that CPR 46.9(2) did not require informed consent, only a written agreement which makes clear that Solicitors can recover more from the Claimant than the amount from the Defendant.
In reaching his decision, Lavender J considered the relationship between CPR 46.9(2) and CPR 46.9(3) together with the case of Herbert v HH Law  2 Costs LR 261. Lavender J stated the following;
‘A solicitor who wishes to rely on CPR 46.9(2) must not only point to a written agreement which meets the requirements of the rule, as the Defendant did, but must also show that his client gave informed consent to that agreement insofar as it permitted payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings. For this purpose, the solicitor must show that he made sufficient disclosure to the client.’
The crux of Lavender’s findings was that B should have given some indication of what the likely recoverable costs from the Insurers might have been.
Lavender J also commented that CAM’s estimate was 5 times the fixed recoverable costs and that under the terms of CAM’s funding documentation, the first £3,200 of the Claimant’s damages would have been paid to the Defendant. He held that this was so striking that it should have been brought to B’s attention.
This decision could have substantial consequences on many Solicitors and as such, there is a chance this could yet get overturned on appeal. However, it is important for Solicitors to take heed of this case and it is advised that further information is provided to a Client about their likely liability.
Please see the full Judgment here.
If you have any questions regarding this summary case law please contact Karl Robson here