Background

No fiduciary duty to client when negotiating the retainer - solicitors could deduct their success fee from recoverable costs.

The Issues

The action settled for damages of £1,916.98 at Stage 2 of the RTA Portal and accordingly the defendant paid the fixed costs of £500.00 (plus VAT and disbursements).  Out of the damages, the solicitors deducted their success fee of £385.50.

The Claimant later issued a Part 8 application requesting that her solicitors deliver a final statutory bill, which subsequently showed a figure in excess of damages.  However the solicitors had capped the Claimant’s contribution to 25% of damages, (£385.50) in accordance with statute.

On appeal, Lavender J held that informed consent had not been given to the client and allowed the solicitors to charge a success fee only on the fixed costs of £500 (£75.00).  They were ordered to repay £295.50 to the Claimant.

The Claimant appealed.

Held

The Court of Appeal decided that:

1. section 74(3) and CPR Part 46.9(2) (which deals with the amount that may be allowed on the assessment of any costs  and which applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings), did not apply at all to claims brought through the RTA portal without county court proceedings being issued
2. the judge was wrong to say that the solicitors owed the client fiduciary duties when negotiating their retainer
3. although the solicitors were not obliged to obtain the client’s informed consent to the terms of the CFA on the grounds decided by the judge, the solicitors did not comply with the Solicitors Regulatory Authority’s Code of Conduct for Solicitors in that they neither ensured that the client received the best possible information about the likely overall cost of the case, nor did they ensure that the client was in a position to make an informed decision about the case
4. the term in the solicitors’ retainer allowing them to charge the client more than the costs recoverable from the defendant was not unfair within the meaning of the Consumer Rights Act 2015, and
5. the court would reconsider the assessment on the correct basis under paragraph 3 of the Solicitors’ (Non-Contentious Business) Remuneration Order 2009 requiring the solicitors’ costs to be “fair and reasonable having regard to all the circumstances of the case”. The costs actually charged to the client in this case were fair and reasonable.

Judgment was handed down on 27 October 2022, concluding that the appeal be allowed and the sum of £295.50 was to be repaid by the client to the solicitors.

Comments

Whilst this judgement has come as a welcome victory for lawyers dealing with personal injury work, this case raised some important questions concerning the way in which solicitors charge their clients for bringing small road traffic accident claims on their behalf. 

Link to full judgement here:

https://www.judiciary.uk/wp-content/uploads/2022/10/Belsner-v-CAM-judgment-271022.pdf

< Back to case list