SGI Legal LLP v Mrs M Karatysz (2021)
SGI Legal LLP v Mrs M Karatysz (2021)
Lack of Client Consent (CPR 46.9(3) (c) ii ) does not Prevent Deduction of Solicitor Costs from Damages
The Issues
SGI Legal LLP, the defendant solicitors in the original case had acted for the claimant in her claim for damages arising out of a road traffic accident which occurred on 27th May 2016.
The claim was successful and damages were agreed at £1250.00 with Aviva, the third party insurers paying costs and disbursements in a total of £1116.00 including VAT.
Out of the claimant’s damages a sum of £312.50 was deducted in respect of the success fee and the ATE premium of £143.00. No bill of costs was provided at that time.
Thereafter the claimant instructed lawyers to dispute the charges, and proceedings for a solicitor-own client detailed assessment under section 70 of the Solicitors Act 1974 were pursued.
The District Judge at first instance, limited the solicitor’s profit costs to the amount of fixed costs recovered from the insurer as there had been no informed consent given by the claimant to the charging of fees in excess of those recoverable from the insurer.
Held
Overturning the original judgement, Mr Justice Lavender ruled in favour of SGI Legal and held that the solicitor’s reasonable costs were to be determined on the basis of reasonable hours and rates. The judge stated that what is usual or unusual as between solicitor and client is a very different question from the question of what is recoverable from the opponent.
Mr Justice Lavender noted that the client had not agreed to the firm going 11 hours of work and being paid £161.00 per hour and therefore the question of whether she gave her informed consent did not arise. However, he said that it did not follow that it was appropriate to limit the firm’s base costs to the amount received from the insurer.
Therefore the judge reinstated the deduction of 25% of the client’s damages that the solicitors had made for their costs.
Comment
This is an important appeal decision that is likely to have an impact on the many claims being made by clients challenging the deductions made from their damages by their former solicitors.
