Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
| DANNY JOHN ANTHONY
|- and –
for the Claimant
Mr Andrew Hogan (instructed by Morgan Phelps Ltd for the Defendant)
Crown Copyright ©
Deputy Master Friston:
'Many claimants find the traditional Lawyer's fee agreement is too focussed on the fees and not enough on the service. It is usually written in complex language, so the claimant never really knows what their lawyer will do for his money. CWPL is not a traditional law firm. Before we start any application in court for you, we disclose what fee range we expect our fees to fall within. Then, in our [documentation] we clearly disclose how our fees will be charged …'
The costs proceedings
'The matter was conducted by Larissa Wilson, a senior Grade A Solicitor, under a private retainer providing for a charging rate.'
'The Defendant has the information to which she is entitled in the bill and by the signed certificate [sic]. Any further funding information will be seen by the Costs Judge on assessment.'
This too was wrong (a fact that Ms Wilson accepted in evidence).
'We have supplied you with all that you are entitled to. All work is post 1/4/13. You are not entitled to disclosure of any funding agreement. It is a fishing expedition.'
That email went on to say that a Part 18 Request would receive the same response and to ask for an offer or payment on account.
'After receiving Part 18 questions from [the Defendant] on 3 September 2018, Brian Varney asked for a copy of the CFA of 10 March 2015. At this point Brian Varney was still unaware that the CFA dated 20 October 2017 was in fact relevant. He amended the bill to incorporate reference to the earlier CFA, Mr Varney still believing that was the relevant CFA.'
'The matter was conducted by Larissa Wilson, a senior Grade A Solicitor, under a retainer/retainer by way of CFA dated 10 March 2015 extended on 17 July 2017 providing for a charging rate of £375 per hour.'
'On 22 November , after conversing with Mr Varney by telephone, I held a telephone conference with counsel and made him aware of the existence of the CFA dated 20 October 2017. I concluded that this was the CFA that was relevant to this matter. Consequently I made a decision to withdraw the then-existing bill and to submit a new bill that was prepared with reference to the full correct funding.'
The barrister who advised in conference was a Mr Ian Simpson, a well-respected specialist in costs.
'The claim against the estate of Terence Henry Anthony deceased and the Defence of the Counterclaim for possession and equity, by Karen Collins, were funded by a conditional fee agreement date 10/3/15 effective 19/2/15, a letter dated 17/7/17 and a conditional fee agreement dated 20/10/17 effective from 6/6/16, whether singly, in combination or otherwise. The conditional fee agreements provided for an additional liability that is not recoverable from the Defendant but which is recoverable from the Claimant.'
The contracts of retainer: overview
The First Agreement: structure
'We are required to ensure that you are fully informed before You and Us enter into the fee agreement in this CFA, and it is important that you read the 4 contract documents before You sign the Signature Confirmation Page and become bound by the CFA.'
'The 4 contract documents are the Disclosure Kit, this Outline Letter, the Fee Terms and the Standard Conditions … please read the Disclosure Kit first. It covers all the important things you need to know, including the things we must Disclose to you by law.'
'Guide/Overview of your CFA Documents
Signature Confirmation Pages [which included a summary of the agreement]
Fee Terms [which had the Notice of Right to Cancel on the second page]
Part 1: Scope of Work/Information on How Fees Calculated [sic]
Schedule 1: Factors the Court May Take into Account when Assessing Your Claim for Further Provision (and Award) from an Estate
Standard Conditions [which I assume to have been intended to have been headed Part 2];
Section 2A: How CWPL Charges & Collect Fees on a Now Win No Fee basis
Section 2B: Security Terms
Section 2C: When Can CWPL Stop Acting as Your Solicitor
Section 2D: Other Terms of the agreement between You and CWPL
Section 2E: Definitions Used in the CFA'
'Topic 1: Information on Our Fees, Interest and Other Charges CWPL may make
Topic 2: Other Information on Your fee agreement and contract with CWPL
Topic 3: Estimate/Range of Total Legal Costs that may be payable by You for our work
Topic 4: Likely Recoverable Fees if You win were [sic] successful in the litigation/After the Event Insurance
Topic 5: Dispute Resolution Procedure: Procedure for Dealing with any Disputes between us
Topic 6: Important Words'
The First Agreement: scope
'In summary, you have asked Us to claim an Award from the estate of your late father.
'Essentially, the word "Claim" refers to the pursuit of Your rights, and CWPL will enforce and secure those right for You.
'CWPL will pursue Your rights to secure, by legal proceedings in the first instance, an Order of the Court that you should be paid an Award from the estate, because the deceased failed to sufficiently provide for You on their death, as required by the legislation dealing with this type of Claim.
'The Claim will be made against the estate of the deceased, under the Inheritance (provision for Family & Dependants) Act 1974 (UK).'
The First Agreement: definition of success
'"Successful Outcome" means that; subject to the provisions of paragraph 2.126 [which dealt with incapacity], in connection with, as a consequence of or in any way related to the Claim … an Existing Entitlement … or the estate:
(a) an Order or Award of a tribunal Ombudsman or courts (including Grant of Probate or Letters of Administration (a grant of representation)) is made in respect of the Claim … or any estate or interest of any estate in any Fund or in any way connected with the Claim;
(b) You become entitled to monies or benefits or any Existing Entitlement, or Your right to them is confirmed;
(c) CWPL has recommended that You accept an offer to settle the Claim; or
(d) If CWPL is not acting as Your solicitor, at any time You enter into any terms of settlement whereby the Claim is settled;
pursuant to or in compliance with which You (or any other Settlement Funds Recipient … are entitled to receive any Settlement Funds … from any person, or would have become so entitled if You had accepted any offer referred to in sub-paragraph 2.125(a) and had received all monies and benefits due as a consequence of that offer and settlement; and any such Settlement Funds shall include any monies or benefits derived from or in any way related to any Existing Entitlement … or vesting in You pursuant to any grant of representation.'
The Second Agreement
'Establishing Link to the Earlier Legal Claim
'A. You have already entered into a fee agreement (set out in the fee agreement/Contract Documents) with CWPL in relation to the Earlier Matter described as such in the Covering Letter (the Earlier Matter and the Earlier Contract Documents).
'B. You and we agree that both this New Matter (the Claim in connection with which these Contract Documents were sent to you) and the Earlier Matter can be considered to be related due to either the timing of both matters, the similarity of the matters, links between the subject matter of each and/or because the outcomes can be considered together when considering whether there has been a Successful Outcome and/or because the same or related or similar people are making your Claim.
'C. Because of this, CWPL requires that both files be considered as if they were one so that all its fees on both files are payable as soon as there is a Successful Outcome to one of the matters, even though the other one is still in progress …'
The Third Agreement
The Third Agreement: structure and scope
The Third Agreement: the ATE condition
'Our agreement is conditional upon you getting insurance cover to cover the risk that you may need to pay the legal costs of the other side, and we must approve the terms of the cover.'
No such cover was ever taken out.
'The claimant's solicitors have continued and continue to act. It is submitted therefore that it is plain that both the claimant and his solicitors have waived any opportunity to consider themselves relieved of their respective liabilities under the contract of retainer. That being so, the paying party cannot take the point either.'
'In my judgment as the requirements for a variation derive from the law governing contract formation the same formalities apply to the variation of the contract as apply to its formation. If a contract such as a CFA is required to be in writing then the variation needs to be in writing to have the same effect before a court. The CFA agreement requires certainty … and I do not believe there can be a back door through subsequent oral variation even if there is some limited supporting documentation.'
The Third Agreement: contractual certainty
'… it is simply a non sequitur to argue from a disagreement about the meaning and effect of a contract to its legal uncertainty … For that to occur—and it very rarely occurs—it has to be legally or practically impossible to give to the parties' agreement any sensible content … that is certain which can be rendered certain …'
'The courts are … reluctant to conclude that what the parties intended to be a legally binding agreement is too uncertain to be of contractual effect and such a conclusion is very much a last resort.'
So, the hurdle that Mr Hogan must clear is a high one: indeed, he is asking the court to reach a conclusion of last resort.
The Third Agreement: comprehensibility in general
'In making these Rules, the Council of the Law Society is acting in the public interest … The inference I would draw is that the Code is there to protect the legitimate interests of the client, and the administration of justice, rather than to relieve paying parties of their obligations to pay costs which have been reasonably incurred.'
'I conclude that it is a question for the discretion of the judge assessing costs in any particular case whether to take into account any failure by the receiving party to provide an estimate in the circumstances and of the kind required by the Code.'
'You must achieve these outcomes … you only enter into fee agreements with your clients that are legal, and which you consider are suitable for the client's needs and take account of the client's best interests.'
'The fact that a party has in the course of performing a contract committed an unlawful or immoral act will not by itself prevent him from further enforcing that contract unless the contract was entered with the purpose of doing that unlawful or immoral act or the contract itself (as opposed to the mode of his performance) is prohibited by law.'
'Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles … providing the information in a clear and accessible form which is appropriate to the needs and circumstances of the client.'
The Third Agreement: control, champerty and public policy
'The client has assigned not only his interest in any sums recovered described as Settlement Funds, but also his rights to claim the Settlement Funds, a purported assignment of his rights of action and giving control of the claim to the solicitors.
'The solicitor has taken control of the litigation: through extensive covenants and requirements for the client to accept his direction of the litigation including any settlement, reducing the client to a mere cipher …
'In short, the solicitor has displaced the client as the real party to the litigation, and by contract assumed a role very different from that as independent officer of the court that a solicitor normally occupies, advancing his client's case, but with an overriding duty to the court.
'The solicitor has put himself into conflict with his client, by subordinating the client's interests to his own through an extremely onerous and unfair agreement.'
(a) Whereas a solicitor may lawfully defer and make contingent his fees upon success in litigation, he has no wider legitimate interest in a suit.
(b) The assignment to the solicitors of the client's right to claim in litigation is "wanton and officious" meddling, in the client's business.
(c) The solicitor's role as independent officers of the court is compromised by their assuming contractual and de facto control of the litigation and reducing the client to a cipher.
(d) By way of example, the solicitors can act to the client's detriment, by directing settlement of the claim at any level which secures their fees, potentially leaving the client with nothing.
(e) The solicitors throughout the litigation, had a beneficial interest in the Property over which the litigation was being fought.
(f) The solicitors have not only acted in conflict with their client's best interests, they have subordinated those interests decisively to their own, and have contractually barred the client from complaining about actions they have taken as agent and attorney.'
i) First of all, I reject the notion that there has been an assignment of the claim (or anything that was effectively the same as an assignment). This is because the Claimant still had an interest in the matter, namely the right to any monies recovered from the estate that were not applied to the Solicitors' fees and disbursements.
ii) Secondly, there was, in my view, no champerty; this is because there was no division of the spoils. To my mind, a division of the spoils means something other than a solicitor merely taking steps to ensure recovery of his or her fees and disbursements.
iii) Thirdly, I remind myself that not only is it permissible for legal representative to require clients to give security for unpaid fees, but such practices are commonplace. I can see nothing inherently wrong—and certainly nothing 'wanton' or 'officious'—with solicitors having a degree of control over a client's affairs in this regard. The Claimant's claim was in respect of a disputed estate, and I can fully understand why in those circumstances (where life-changing amounts of money may be involved) the Solicitors demanded a greater degree control over matters than, for example, they would have asked for had they been representing a client in a modest personal injury claim. The way they have achieved this may have been excessive and possibly even objectionable, but on the facts of this case, I am unable to say that they went so far as to offend against public policy.
iv) Finally, having seen Mr Johansson give evidence, I was struck by the fact that when skilled counsel forced him to examine the provisions he had drafted, he was genuinely shocked and embarrassed by how assertive his own words were. I have no doubt at all that if push came to shove, the Solicitors would have acted reasonably. Mr Hogan said that when considering whether a contract of retainer offends against public policy the court should look at the tendency of the contract to corrupt; I agree with this, but I do not agree with him that this should be done without reference to the facts generally.
The Third Agreement: suitability in terms of the success fee
'The term "Successful Outcome" in relation to the matter means that one of the following events:
a verdict judgment or award in your favour, and including or a Grant of Probate or Letters of Administration (a grant of representation);
is made entered into or occurs in relation to the Claim, the estate, a fund or any of them or arising out of or in the circumstances of the matter, and as a consequence there are Settlement Funds arising payable or transferable which are retained paid or transferred to you or on your account, in relation to your defence and in relation to an account CWPL proposes to or has raised in relation to the matter, but if no the Settlement Funds are so retained paid or transferred within 30 days of the first event to occur or within such later period permitted by CWPL, a Successful Outcome shall be deemed to have occurred on the happening of that event.'
'The effect of this is to increase significantly the Claimant's liability to his solicitors and turn what are term[ed] Conditional fees into Unconditional fees. Yet a 50% success fee was still charged to the client.'
In his oral submissions, Mr Hogan put this point slightly more direct terms: he said that the Solicitors had 'stitched the Claimant up like a kipper'.
'Any Uplift Fee charged would be 50% of the Service Fees, calculated up until the Successful Outcome occurs.'
In my view, this means that the success fee is charged only up to the point that a successful outcome occurs. In view of the above, I do not accept Mr Hogan's submissions concerning the suitability of the Third Agreement.
'(i) The Claimant and/or the Claimant's representatives negligently represented or wilfully concealed the true nature of the retainer on multiple occasions.
'(ii) The Claimant and/or the Claimant's representatives negligently represented or wilfully miscertified a Bill of Costs on multiple occasions.
'(iii) The Claimant and/or the Claimant's representatives failed to answer fully completely or accurately the enquiries made as to the retainer on multiple occasions.
'(iv) The Witness Statement of Mr Terence Johansson does not comply with [an order] and conflicts with the description of the retainer in the replacement Bill of Costs. Either the account contained in the witness statement is inaccurate or the account contained in the replacement Bill of Costs [is inaccurate], or both.'
'Conduct which would be regarded as improper according to the consensus of professional (including judicial) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code.'
'The expression ['unreasonable'] aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. … The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable.'
'i) A solicitor as a legal representative owes a duty to the court, and remains responsible for the conduct of anyone to whom he subcontracts work that he (the solicitor) is retained to do. That is particularly so where the subcontractor is not a legal representative and so does not himself owe an independent duty to the court.
ii) Whilst "unreasonable" and "improper" conduct are not self-contained concepts, "unreasonable" is essentially conduct which permits of no reasonable explanation, whilst "improper" has the hallmark of conduct which the consensus of professional opinion would regard as improper.
iii) Mistake or error of judgment or negligence, without more, will be insufficient to amount to "unreasonable or improper" conduct.
iv) Although the conduct of the relevant legal representative must amount to a breach of duty owed by the representative to the court to perform his duty to the court, the conduct does not have [to] be in breach of any formal professional rule nor dishonest.
v) Where an application under CPR rule 44.11 is made, the burden of proof lies on the applicant in the sense that the court cannot make an order unless it is satisfied that the conduct was "unreasonable or improper".
vi) Even where the threshold criteria are satisfied, the court still has a discretion as to whether to make an order.
vii) If the court determines to make an order, any order made (or "sanction") must be proportionate to the misconduct as found, in all the circumstances.'
'As officers of the court, solicitors are trusted not to mislead or to allow the court to be misled. This elementary principle applies to the submission of a bill of costs.'