Tag: CFAs

The high price of terminating a conditional fee agreement without cause

Robert PattersonLeave a comment

HD & Ors v North Devon Healthcare Trust & Ors, is a recent decision of the Senior Courts Costs Office which offers a useful reminder that a solicitor’s retainer, like any contract, can be brought to an end by conduct and that walking away from a client’s matter can amount to a repudiatory breach with real consequences for the solicitor’s ability to recover fees.

Background

The case arose out of a large cohort of claims brought by patients who alleged failings in the consent process around the use of synthetic mesh for pelvic conditions. The Solicitor, a sole practitioner, had been instructed to act for claimants pursuing damages against various NHS trusts, and six of those claims were linked together for the purposes of resolving common preliminary issues in the detailed assessment proceedings.

The detailed assessment proceedings in those six linked claims had a troubled procedural history, including an aborted five-day hearing in November 2022 after the Claimants’ solicitor failed to lodge the papers required under the Practice Direction to CPR Part 47, which meant the hearing could not proceed. Matters then took a more serious turn. In May 2023, the Solicitors Regulation Authority intervened into the solicitor’s practice. Subsequently, the firm ceased to trade, and the solicitor later faced allegations of professional misconduct before the Solicitors Disciplinary Tribunal. Judgment was given in March 2026 and he was struck off the Roll of Solicitors.

However, the solicitor was not formally removed from the court record as solicitor for the Claimants until June 2025, some two years after the SRA’s intervention, and in the intervening period nothing happened in the detailed assessment proceedings.

The application, and the question of repudiatory breach

Against that background, the Defendant NHS trusts applied for a declaration (and other orders) that the conditional fee agreements between the Claimants and their solicitor had been terminated by the solicitor without good reason and were accordingly unenforceable.

Costs Judge Joseph accepted that submission. The reasoning is worth setting out because it shows how a repudiatory breach can be found from inaction rather than from any explicit renunciation. The judge noted that the Defendants relied on the SRA’s intervention, the shutting down of the solicitor’s practice, his eventual striking off (which meant he was personally prohibited from continuing to act even had he wished to), and his failure to take any steps in the detailed assessment proceedings for a considerable period.

The judge’s central finding was unambiguous: it was a fundamental term of any retainer that the solicitor should act in the matter he had been instructed on, and failing to act in any way, for such a long time, without any credible explanation, constituted a repudiatory breach of the retainers by the solicitor. Notably, there was no evidence of any conduct by the Claimants that might have justified the solicitor terminating the retainers himself: the breach was entirely his.

The judge went on to find that the breach had been accepted. The Claimants accepted the repudiatory breach through their conduct in not instructing the solicitor any further once his practice had been intervened, with some seeking alternative legal advice thereby expressly indicating they no longer wished to avail themselves of his services. There was no evidence that either the SRA or its intervening agents had taken any steps in the costs proceedings on the solicitor’s behalf since the intervention, and the judge summarised the position starkly: the solicitor had abandoned the claimants and their costs proceedings.

Repudiatory breach

The finding of repudiatory breach was analysed in the context of a solicitor’s retainer as an entire contract. The judge cited the statement of Lord Esher MR in Re Underwood & Piper v Lewis, that a solicitor’s retainer in an action is an entire contract to conduct the action to its conclusion, and that a solicitor cannot sue for costs until that contract has been fulfilled. Lord Esher MR did recognise that a solicitor might be entitled to bring a retainer to an end in some circumstances, but only upon giving the client reasonable notice.

Applying that framework, the judge found that the conditional fee agreement with the lead claimant, HD, extended to negotiating or obtaining a court assessment of her recoverable costs, and that step had by no means been completed. Given the intervention into his practice, there was no prospect of the solicitor ever fulfilling his obligations, and the judge inferred from the lengthy period of complete inactivity that he had evinced no intention of doing so. On that basis, the conditional fee agreement was found to be unenforceable by the solicitor against HD, and, by inference from the standard nature of his retainers, the same conclusion applied across all the Claimants in the six linked claims.

Consequences

Once the conditional fee agreements were found to be unenforceable, several consequences followed from the Defendants’ application:

  • If the Claimants had no liability to their solicitor for costs incurred under an unenforceable conditional fee agreement, they could have no claim against the Defendants for those costs and any other outcome would breach the indemnity principle. As a result, the detailed assessment proceedings in the six linked claims had to be struck out.
  • The Judge went on to find that the Claimants’ costs proceedings had been deliberately allowed to become dormant, amounting to a serious abuse of the court’s process, and ordered immediate strike out as the only realistic and proportionate response.
  • With the retainers unenforceable, the case for the solicitor to repay £92,000 of payments on account of costs made to him by NHS Resolution became, in the Judge’s words, “unanswerable,” and an order was made accordingly.
  • The wider cohort of Claimants who had not commenced detailed assessment proceedings at all were placed under an unless order requiring them to do so within 28 days, otherwise they would lose their entitlement to costs altogether.
  • Applying CPR 44.11, the Judge found the solicitor’s conduct (failing to lodge required papers before an aborted five-day hearing, and thereafter abandoning the assessments) unreasonable, engaging the court’s power to order a non-party legal representative to pay costs personally.
  • Those costs were ordered to be paid by the solicitor on the indemnity basis, the Judge finding his conduct took the case well outside the norm.

Conclusion

Whilst this was an extreme case (involving as it did a regulatory intervention, prolonged and unexplained inactivity, and the practical impossibility of ever completing the retainer’s obligations), it nevertheless serves as a stark reminder of the consequences of a repudiatory breach (the loss of the right to payment), which can occur even against a relatively benign background. Practitioners would be well advised to take very great care when terminating retainers, especially if they are a conditional fee agreement.

Robert Patterson, who is a Senior Associate in Clarion’s Costs & Litigation Funding team. Please contact the team at civilandcommercialcosts@clarionsolicitors.com.

How to lose a million

Dominic ReganLeave a comment

The Supreme Court has refused to entertain an appeal against the decision in XDE V NORTH MIDDLESEX UNIVERSITY HOSPITAL NHS TRUST (2020) EWCA Civ 543. The claimant was switched from legal aid to a conditional fee agreement in the run up to the implementation of the Jackson reforms.
On the face of it, this would enable those acting for the claimant to secure not only base costs but also an uplift of 100% and the cost of after the event insurance.
On settlement of this substantial claim the defendant asserted that these additional liabilities were unreasonably incurred and ought to be disallowed. The Courts agreed.
Coulson LJ noted that evidence as to the rationale of the switch was conspicuously absent. Indeed, the decision to effect the change was that of the Solicitor. It was imposed upon the client.
It remains open for a claimant who did move onto a CFA to recover additional liabilities but there is a heavy burden, demanding explicit material, to convince the court that it was done in the best interests of the client.

This blog was written by Professor Dominic Regan who is working with the Costs and Litigation Funding team as a consultant.

Pre 1.4.13 CFA – Advocacy or Litigation services provided OR not?

Andrew McAulayLeave a comment

The recent case of Choudhury -v- Markerstudy could have serious repercussions for receiving parties in Detailed Assessments.  Here is a brief summary of the case:

  • Rohan Choudhury (a child) suffered an accident on 12 March 2013. Rohan was a minor and was therefore represented by her Mother, Mrs Choudhury.
  • An Infant Approval hearing took place in January 2015, where the Court approved a settlement figure of £1,050.00.
  • The Claimant was represented by Irwin Mitchell solicitors, who at the time of instruction, were acting under a Collective Conditional Fee Agreement (CCFA) with Aviva.
  • Following the accident Aviva wrote to the Claimant, and thereafter, Irwin Mitchell wrote to the Claimant explaining the terms in which they would be retained. Those letters were sent before 1 April 2013, but no other work was carried out.
  • Mrs Choudhury instructed Irwin Mitchell by signing a document on 1 April 2013 and returning it. The document that she signed was the pre 1 April 2013 CCFA.
  • The Defendant argued that the retainer was invalid because it was signed and entered into on 1 April 2013, but was based on a regime which on 1 April 2013, was no longer available to litigants (and therefore invalid).
  • The Claimant stated that this was incorrect because ‘Advocacy or litigation Services were provided to the Claimant under the agreement in connection with that matter before the commencement day’ (Section 44.6, 6b of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 – ‘LASPO’).
  • The Court ruled that ‘Advocacy or litigation services’ had not been provided and therefore the retainer was invalid. As a consequence, no costs were payable by the Defendant to the Claimant as there was no indemnity between the Claimant and the Claimants Solicitors.

The District Judge clearly adopted a strict interpretation of LASPO and what amounts to ‘Advocacy and litigation services’. The paying party did not dispute that if litigation services had been provided then the retainer would have been valid.

This Judgment will no doubt cause concern to receiving parties.  Whilst the Judgment is only at County Court level, it will encourage paying parties to raise such arguments. There will still be plenty of cases left in the system where the additional liabilities were entered into very close to 1 April 2013.  In fact, it was widely reported in many legal publications (at the time) that law firms had signed up clients to Conditional Fee Agreements, and in particular ATE insurance, very close to the deadline of 1 April 2013.

Many believe that a black and white approach should be adopted in relation to the inception i.e. if the additional liability was incepted pre 1 April 2013 then it is valid and the associated additional liability recoverable, however, if it is entered into post 1 April 2013 then the additional liability is not recoverable.  The issue over ‘Advocacy or litigation services’ will create some interesting arguments!

In my opinion, what law firms should have done is sent a “holding” Letter of Claim to the Opponent (or likely Opponent) prior to 1 April 2013.  Surely, this would have provided protection from the ‘Advocacy or litigation services’ point?

The key practical point from the Judgment is that the work which was done before 1 April 2013 was effectively ‘client care’ work. In reality, the case will only have an impact on clients who were signed up to CFA’s and/or ATE insurance premiums close to 1 April 2013.  For example, if a client was on a private fee paying retainer from say January 2013, but switched to a CFA retainer in late March 2013, then ‘Advocacy or litigation services’ would have most likely been provided by the time the CFA was entered. This scenario would therefore be safe from the argument.

It is widely reported that fixed costs for all fast track work and low level multi-track work will be introduced in October 2018. Those who draft the rules as to implementation need to do so carefully as otherwise arguments and satellite litigation will take place.

This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding. He can be contacted on 0113 336 3334 or at andrew.mcaulay@clarionsolicitors.com.

 

Looking Back: are costs incurred prior to the date of a CFA recoverable?

Joanne ChaseLeave a comment

For retainers entered into on and after 1 April 2013, success fees have been, in the vast majority of cases, unrecoverable inter partes. For this reason, it is easy to think that there is less need to be rigorous in compliance with the letter of the rules relating to CFAs as, the thinking goes, they will never be tested. Unfortunately such an attitude can have dire consequences, and could even lead to all of the costs claimed being disallowed.Read More »

“Further decision on the Assignment of CFAs from Master Rowley in the SCCO”

Joanne ChaseLeave a comment

In Webb v London Borough of Bromley 2016 (unreported), the Claimant challenged a decision by Master Rowley following the Provisional Assessment of the Claimant’s Bill of Costs. Within the Provisional Assessment, Master Rowley had found an assigned CFA between Lefevre LLP to Glamorgan Law LLP (on behalf of the Claimant) to be unenforceable as it failed to comply with the CFA Order 2013. The Master awarded no fees following the transfer to Glamorgan Law LLP other than disbursements paid directly by the Claimant.

The Claimant proceeded to challenge that decision and the matter proceeded to an oral hearing on 18 February 2016. Master Rowley listened to submissions on behalf of both parties but again concluded at paragraphs 60 and 61 of the Judgment that the CFA was unenforceable and that the assigned document failed to comply with the fundamental features of a CFA post 01 April 2013. The Master confirmed that “non-compliance with the Regulations is fatal” and proceeded to revise his original decision and concluded that “those costs relating to Glamorgan Law LLP are not recoverable either as to base costs or as to the success fee”.

Any questions? Please contact Joanne Chase at joanne.chase@clarionsolicitors.com or call on 0113 336 3327