Supreme Court finds in favour of Claimant Solicitors seeking an equitable lien over costs

In a favorable judgment for Claimant Solicitors, the Supreme Court has decided by a narrow 3:2 majority that the Claimant’s Solicitors were entitled to an equitable lien over their clients’ compensation for their costs.

The Facts

The case centered around proceedings brought against Ryanair by Bott & Co Solicitors, a North West firm who handle a high volume of delayed flight compensation claims. The Defendant had been leapfrogging the Claimant’s Solicitors once a claim was submitted and settling matters with the Claimants, who in turn were not passing on costs due to Bott & Co. The Claimant’s Solicitors acted on Conditional Fee Agreements in the cases, with costs being 25% of the total compensation amount awarded to the client plus VAT, plus an administration fee. Costs were to be deducted from the compensation before it was paid to the Claimants. Bott brought proceedings, seeking both an equitable lien over the compensation and injunction to prevent Ryanair taking this approach in cases where notice that they had been retained had been provided.

The Decision

In determining the key issues, consideration was given to the Court’s earlier decision in Edmonson v Haven [2018] UKSC 21. Here the Supreme Court examined the role of the solicitor’s equitable lien in the context of modern litigation, where access to justice is a central underlying goal and out of court settlements and alternative dispute resolution are encouraged. In Edmonson, the Court had decided that the solicitor was entitled to an equitable lien over the settlement fund because the work had made a significant contribution to the settlement of the client’s personal injury claim. That case flowed from the position whereby a Claim Notification Form had been submitted through the Pre-Action Protocol for Low Value Personal Injury Claims. This, in the words of Lord Burrows ‘implicitly overruled’ the Court of Appeal’s decision in Meguerditchian v Lightbound [1917] 2 KB 298, which decided that the trigger for an equitable lien was whether proceedings had been issued.

Being bound to follow the decision in Edmonson, Lord Burrows for the majority, stated that ‘the appropriate test for a solicitor’s equitable lien is whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client’. It was decided that although the majority of flight compensation claims are settled without any dispute, the act of advancing the Letter of Claim by Bott & Co, was sufficient to satisfy this test.

The decision of the Court also centred around promoting access to justice, with the logic being that this would be promoted further if Solicitors were comfortable knowing that they had the security of a lien to recover their costs. Lady Arden for the majority stated that ‘effective access to justice has become a foremost animating principle of the equitable lien’.

In their dissenting judgements, Lord Legatt and Lady Rose based their decisions, amongst other reasons, on the fact that there was no real prospect of a dispute in these types of cases.

The result

The fact that the requirement for a dispute does not form part of the test for establishing an equitable lien, opens the door for the application of this case to a greater number of cases, particularly as litigation continues to be driven to become more streamlined. The decision, as acknowledged by Lord Burrows in his judgement, is ‘at the outer limits of a solicitor’s equitable lien’, but nonetheless provides Solicitors with a greater degree of certainty and ensures there should be firms willing to undertake relatively low value work on behalf of Claimants in the future, which can only be a good thing.

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