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England and Wales High Court (Senior Courts Costs Office) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Senior Courts Costs Office) Decisions >> Richardson & Ors v Slater & Gordon UK Ltd [2025] EWHC 1220 (SCCO) (19 May 2025)
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Cite as: [2025] EWHC 1220 (SCCO)

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Neutral Citation Number: [2025] EWHC 1220 (SCCO)
Case No: SC-2021-APP-000184

IN THE HIGH COURT OF JUSTICE
SENIOR COURTS COSTS OFFICE

Thomas More Building
Royal Courts of Justice
London, WC2A 2LL
19/05/2025

B e f o r e :

SENIOR COSTS JUDGE ROWLEY
____________________

Between:
David Richardson and 223 Others
Claimants
- and -

Slater & Gordon UK Limited
Defendant

____________________

Roger Mallalieu KC (instructed by JG Solicitors) for the Claimants
Robert Marven KC (instructed by Slater & Gordon UK Limited) for the Defendant

Hearing dates: 14 – 18 October 2024

____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

Crown Copyright ©

    This judgment was handed down remotely at 10.30am on 19 May 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

    Senior Costs Judge Rowley:

    Introduction

  1. This is my reserved judgment on the nine preliminary issues agreed by the parties to be heard during the week beginning 14 October 2024 and with the benefit of evidence given by five witnesses and submissions over two days by Roger Mallalieu KC for the claimants and Robert Marven KC for the defendant.
  2. The nine issues can be summarised as follows:
  3. i) Are the retainers entered into unenforceable Damages Based Agreements ("DBA")?

    ii) The application and effect of the Consumer Contracts (Information, Cancellation and Additional Charges) ("CC(ICAC)R")" Regulations 2013 upon the retainers.

    iii) Has there been compliance with Regulation 14 CC(ICAC)R?

    iv) Did the defendant provide information in respect of the potential liability to pay the defendant's costs in excess of the costs likely to be recovered from the opponent in an appropriate manner?

    v) In respect of issued claims, was there a failure to obtain informed consent to contractual terms permitting payment to the defendant of an amount of costs greater than could be recovered from another party in the proceedings?

    vi) In respect of unissued claims, were the costs fair and reasonable, or otherwise of an unusual nature?

    vii) Were the terms fair by reference to the Consumer Rights Act ("CRA") 2015?

    viii) Success fees

    ix) Hourly rates

  4. The defendant sought to add to the matters for the court to consider by reference to a further point regarding whether the claimants had compromised any potential claims in these proceedings when agreeing to accept offers from the original tortfeasors in discussion with the defendant. That argument, relating to the case of Holcroft v Thorneycroft Solicitors [2024] EWHC 1473 (KB), was 'parked' for the time being, not least because that decision has been appealed to the Court of Appeal.
  5. Having heard the evidence of the witesses, the claimants decided not to pursue preliminary issue 2. I have left it in the above list and the decisions at the end of this judgment for the sake of completeness.
  6. Even in summary form, and without the Holcroft issue, the breadth of the challenges to the defendant's fees are significant. Consequently, this is a lengthy judgment. I have recorded some of the background to these proceedings before considering the evidence of the claimant witnesses and the inevitable limitation to some of their evidence caused by the length of time that has passed since they instructed the defendant. Some of the preliminary issues can only be considered once a view has been taken about which terms need to be prominently displayed. As I describe below, the parties contend for very different approaches regarding the depth of the information to be provided, particularly orally. I have therefore had to deal with what, in some ways, seems to me to be the crux of this case, before going on to consider the nine specific questions.
  7. Background

  8. As the heading of this case makes clear, there are 224 claimants in total bringing claims against the defendant. Ten of those were selected (five by each side) as "test claimants" so that their individual cases could be used as evidence to deal with the preliminary issues (at least).
  9. I gave directions on 23 April 2024 for the exchange of witness evidence between the claimants and the defendant and then for either party to confirm that they wished to cross-examine any of the witnesses of the other party. Both sides took advantage of that provision and so, in preparation for the hearing, I was expecting there to be ten witnesses on the claimants' side and one witness from the defendant.
  10. Shortly before the hearing, it became apparent that only four of the ten claimants were likely to be attending court. The claimants made an application to rely upon the witness statements served by four of the five other claimants who were unable to attend court. The tenth claimant had not provided a witness statement or seemingly taken any part in the proceedings insofar as they related to the preliminary issues.
  11. I gave a judgment on the first day dismissing the claimants' application and so consequently the witness evidence before me concerns four of the claimants together with the single witness from the defendant:
  12. i) Michelle Marie Webber

    ii) Terry Moult

    iii) Jeremy David Rabinovitch

    iv) Chelsea Gwilliams

    v) Jade Ryan (D)

    The evidence of the Claimants

  13. I should say at the outset that I considered all the witnesses to be attempting to assist the court when giving their evidence. Nevertheless, the events with which they were concerned were a considerable number of years ago. Indeed, the accidents about which they originally consulted the defendant were between six and eight years before they produced any witness statements in these proceedings. None of the witnesses had made any notes of the conversations with the defendant during the progress of the original claims and as such were reliant upon their recollection of events.
  14. In the circumstances, I cannot but be reminded of the warnings given by Mr Justice Leggatt (as he then was) on the fallibility of oral evidence in the case of Gestmin SGPS SA v Credit Suisse (UK) Ltd & Anor [2013] EWHC 3560 (Comm)
  15. "Evidence based on recollection
    15. An obvious difficulty which affects allegations and oral evidence based on recollection of events which occurred several years ago is the unreliability of human memory.
    16. While everyone knows that memory is fallible, I do not believe that the legal system has sufficiently absorbed the lessons of a century of psychological research into the nature of memory and the unreliability of eyewitness testimony. One of the most important lessons of such research is that in everyday life we are not aware of the extent to which our own and other people's memories are unreliable and believe our memories to be more faithful than they are. Two common (and related) errors are to suppose: (1) that the stronger and more vivid is our feeling or experience of recollection, the more likely the recollection is to be accurate; and (2) that the more confident another person is in their recollection, the more likely their recollection is to be accurate.
    17. Underlying both these errors is a faulty model of memory as a mental record which is fixed at the time of experience of an event and then fades (more or less slowly) over time. In fact, psychological research has demonstrated that memories are fluid and malleable, being constantly rewritten whenever they are retrieved. This is true even of so-called 'flashbulb' memories, that is memories of experiencing or learning of a particularly shocking or traumatic event. (The very description 'flashbulb' memory is in fact misleading, reflecting as it does the misconception that memory operates like a camera or other device that makes a fixed record of an experience.) External information can intrude into a witness's memory, as can his or her own thoughts and beliefs, and both can cause dramatic changes in recollection. Events can come to be recalled as memories which did not happen at all or which happened to someone else (referred to in the literature as a failure of source memory).
    18. Memory is especially unreliable when it comes to recalling past beliefs. Our memories of past beliefs are revised to make them more consistent with our present beliefs. Studies have also shown that memory is particularly vulnerable to interference and alteration when a person is presented with new information or suggestions about an event in circumstances where his or her memory of it is already weak due to the passage of time.
    19. The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.
    20. Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.
    21. It is not uncommon (and the present case was no exception) for witnesses to be asked in cross-examination if they understand the difference between recollection and reconstruction or whether their evidence is a genuine recollection or a reconstruction of events. Such questions are misguided in at least two ways. First, they erroneously presuppose that there is a clear distinction between recollection and reconstruction, when all remembering of distant events involves reconstructive processes. Second, such questions disregard the fact that such processes are largely unconscious and that the strength, vividness and apparent authenticity of memories is not a reliable measure of their truth."
    22. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth."
  16. Each claimant provided two witness statements. The main statement for each claimant is broken down into the following headings:
  17. i) accident circumstances

    ii) my initial contact with the solicitors

    iii) the contract signing process

    iv) after the event insurance policy

    v) correspondence throughout the claim

    vi) conclusion

  18. There are additional headings in some cases, for example in respect of physiotherapy treatment for Mr Moult, but the witness statements follow the same basic structure. The second witness statement for each claimant contains five standard paragraphs before responding to the relevant passages of the witness statement of Ms Ryan served on behalf of the defendant.
  19. The oral evidence of the four claimants who were called followed a similar path. They gave evidence confidently at the outset regarding the process of speaking to representatives of the defendant. They all had an element of the claim which they said they had not been told about – the 25% deduction from damages (Webber); the ATE premium (Moult); the recovery of costs from the opponent (Rabinovitch); a medical fee said to be charged twice (Gwilliams) - but their evidence became less certain when they were taken to documents that they had received and which, on the face of them, contradicted the statement that they had made early in their evidence about being unaware of the deduction, ATE premium et cetera.
  20. The entirely natural desire of the witnesses not to resile from the evidence set out in their witness statements and /or said in evidence was met with print literally in black-and-white which caused some linguistic contortions in the witness box as a result. For the reasons expressed by Leggatt J regarding the production of witness statements and the refreshing of memories, I take the view that the witnesses' recollections have evolved rather than that they were seeking to argue something which they knew not to be true. Generally, the outcome of being faced with contradictory documentation led to an acceptance (albeit sometimes reluctantly) that the witnesses' belief might not have been entirely correct.
  21. I give, as one example of this, the early evidence of Mr Rabinovitch. He said that after the onboarding call, he received an email containing the retainer documents and was asked whether he had read them. He responded positively and stated that he was "quite good like that" i.e. in reading documentation he had received.
  22. However when Mr Marven took him to paragraph 32 of his first witness statement, Mr Rabinovitch was forced to face a statement that he had not considered it necessary to read through the documentation on the basis of an assurance he had received at the telephone that all agreements for personal injury claims were the same and so there was no point in going through the documentation at the time. Mr Rabinovitch attempted to steer a path through this apparent contradiction by suggesting that he looked through some of the documentation but not all of it. It did not seem to me that he was convinced by this argument and I am afraid that I was not convinced by it at all.
  23. He suggested that he was particularly interested in checking the documentation to see where it stated that he would be paying no more than 25% of his damages by way of deduction to the solicitors. When taken to the first page of the Conditional Fee Agreement ("CFA") he alighted on a paragraph stating that the solicitors "may deduct and retain up to 25% from any interim or final damages payments received." That tied in with his evidence that, although it was his recollection that the 25% figure was fixed, he accepted that it might have been described as being "up to 25%" or some similar phrase.
  24. He was then taken to the other instance of 25% set out on that page as part of the following passage:
  25. "…if there is a shortfall between the fees recovered from Your Opponent and your Legal Costs the maximum you will be required to pay Us for our fees over and above any sum recovered from your Opponent shall not exceed a sum equivalent to 25% of the damages you have received. The cost of the insurance premium may be payable in addition."
  26. Mr Rabinovitch was forced to accept that the last sentence of this passage referred to the insurance premium being payable in addition to the 25% deduction. This did not tally with the evidence given at paragraphs 34 to 38 of his first witness statement which said that he had not received any information about the ATE policy in the original call and had only heard about it later when the policy had been taken out on his behalf, which he assumed he was required to do as part of his claim, and that the cost of such premium would form part of the 25% deduction.
  27. Nor did this fit with Mr Rabinovitch's most firmly held view regarding his complaint about the defendant's charges, which was that he was not aware that they would be seeking costs from his opponent in addition to a percentage of his damages.
  28. Mr Rabinovitch's evidence seemed to me to be very clearly that he had no complaints about the way that the defendant had handled his case nor the 25% deduction from his damages. Even the ATE premium seemed to cause little angst notwithstanding the terms of his evidence. However, the receipt of an invoice at the end of the case which showed that the defendant had also received monies from the original tortfeasor, was something which caused profound dissatisfaction. He said that it was the reason that he went to his new solicitors and described the revelation that the defendant had obtained more by way of costs than he had understood to be "unfair." Whilst he used that particular word repeatedly, it was not clear to me whether he considered the situation to be unfair to himself, to the tortfeasor or to some other person. It was put to him by Mr Marven that he received exactly the same amount of money as he was contracted to receive regardless of whether the solicitors obtained more money from the opponent. Whilst he accepted that to be the case, it did not shake his view that he should have been informed of the complete picture.
  29. Similarly, Mr Marven pressed Mr Rabinovitch to accept that the partial picture he said he had was entirely a result of him not reading documentation that he had received. Mr Marven suggested that if he had read that documentation as he suggested he would have done at the beginning of his evidence, then he would have had the complete picture since a recovery was clearly envisaged in the documentation? Mr Rabinovitch agreed with this but said that, if he had known about the extra recovery, he would have looked to see if other firms might have taken on this case instead.
  30. I have set out these elements of Mr Rabinovitch's cross-examination because they illustrate a point which is generally applicable to all of the claimants' witnesses. The onboarding pack, including the CFA, formed part of the disclosure provided by the defendant to the claimants prior to the drafting of their first witness statements. Given this disclosure, it was dispiriting to hear evidence that demonstrated the witnesses had clearly not read the CFA etc even when preparing their witness statements.
  31. Having heard them give evidence, I have no doubt that they simply did not look at the documentation to any great extent when it was originally emailed to them following their telephone call with the defendant. It seems to me that this makes it difficult for the claimants to argue that if they had been provided with more information they would have done something else. It is abundantly clear that they did not engage to any great extent with the information they had been provided with in any event.
  32. The resiling from initial comments point relates also to Ms Webber, in some respects. But it would be fair to say that she was more inclined to stand her ground on her recollections regarding certain points. As such, it is right that I set this out, albeit that it caused other issues with her evidence. In Ms Webber's first witness statement, she said that she had not been advised (i) about the 25% deduction, (ii) the need to take out an ATE policy or (iii) that the defendant would recover costs from the opponent. She said she only became aware that an ATE policy had been taken out during the course of the claim and she only came across the 25% deduction when an offer from the opponent was made and she received advice in writing about this deduction. The existence of the additional costs recovered from the opponent only came to light recently when the statutory bill had been delivered. In her second statement, she repeated the points about not being told of the deduction, the ATE policy and the further recovery by the solicitors. Whilst she accepted that some of these issues were covered in the document pack, she reiterated that she had not been given time to read the documents before being required to sign the documents.
  33. In the witness box, Ms Webber was asked about a previous claim she had made using other solicitors. She said that she had not paid their fees, although her claim was successful. When Mr Marven asked who had paid their fees? Ms Webber said that she did not think "they were doing it for nothing." When pressed, she said she believed the other party's insurers would be paying for them. In this respect, it seemed to me that she essentially resiled from her written evidence that she did not believe that the defendant would receive any costs from her opponent's insurers.
  34. In relation to the 25% deduction, however, Ms Webber described notification of the driver's insurer's offer to settle the claim for £10,000 received by her by telephone. She said that she was not told about the deduction and that it was only when she had told her mother about the settlement that her mother had queried whether the figure was correct. She then rang the solicitors and was told about the deduction which she felt she was forced to accept on the basis that she was told it was the best that she was going to get.
  35. This does not entirely tally with her first witness statement in which Ms Webber simply recorded informing her mother of the settlement. In that statement, she said that she received a letter from the defendant which advised about the deduction from her compensation. As she could not understand where this deduction came from, she then called the solicitors and was given the advice that the 25% deduction would be made. The inconsistency in how the challenge to the deduction came about perhaps does not matter, although it does chime with the Gestmin guidance about firmly held views not necessarily being more persuasive than others.
  36. More importantly, in my judgment, was the certainty with which she held views concerning the signing up process that were markedly different from the other claimants and their experience. She did not consider the explainer script bore any resemblance to the conversation she had with the person who sent her the documents. She said, as did Ms Gwilliams (below), that most of the conversation related to her accident. But Ms Webber's call became two calls since she had to end the first call in order to be able to open the documents emailed to her on her phone. Accordingly, the explainer script would have represented the entirety of the second call and it is odd that Ms Webber did not recognise the contents. I note that there is nothing specific in her statement following this comment as to what she did think had been explained to her.
  37. Ms Webber accepted that, although she would have expected to receive copy documents following the telephone call, not least because there was no way she could read all of the documentation within 10 minutes, she did not in fact look at the documents sent by email until she had instructed her solicitors in respect of this claim. She also did not recall seeing a number of other letters that had been sent to her by email during the course of the claim against the original tortfeasor. She did look at a letter which included notification that an ATE policy had been incepted and which Ms Webber did not challenge. Similarly, in Ms Webber's description of becoming aware of the deduction at the time of settlement, she did not challenge it with any vehemence. Given how pleased she said she was at the offer of £10,000 compared with the valuation advice of roughly half that sum, it is also odd that she was prepared to agree to hand over half the difference simply because she was told that was the case.
  38. There is no direct evidence to contradict Ms Webber's version of events but, given the oddity of some of it, I tend to the view that it has been affected over time in the manner described in Gestmin so that its weight is more limited than might otherwise have been the case. I take the view that the onboarding conversation between the defendant's representative and each claimant rather more closely followed the script as is borne out by the contemporaneous transcript of Ms Gwilliams' call and the evidence of the other witnesses that I heard.
  39. A repeated refrain from all of the witnesses was that since the information was coming from a solicitor at the telephone or via email, they could trust it and so did not have to check it. However, other elements of the witnesses' evidence suggested that this was not always their stance. For example, Ms Webber acted upon her mother's query about whether the figures were correct on the proposed settlement in order to make sure that the figures had not been miscalculated in some way. Mr Rabinovitch gave evidence that to me suggested that he checked every letter to ensure that the deduction from his damages would be no more than 25%. Neither of these instances suggests a trust in the solicitors which could possibly obviate any need to check the terms of the retainer.
  40. All of the witnesses recalled being told that the way the defendant was describing the process of pursuing the claim was that it was the same as any other solicitor would do. The implication was therefore that there was no point in going anywhere else.
  41. It seemed to me that the witnesses were not entirely clear as to the extent of the defendant's representations about what other solicitors did and it was disputed by Ms Ryan and, in submissions, by Mr Marven that the statement about what all solicitors did had any bearing on the deduction from damages. Nevertheless, it was plain to me that the script used by the defendant's representative was intended to convey a sense of the onboarding process being standard and likely to be replicated elsewhere. The comments were carefully drafted to be defended if necessary as obligations imposed by legislation. For example, the 25% deduction figure is a statutory cap and a reference to that being the most that any other solicitor could charge would be accurate. But the repeated reference to all firms having to do certain things in my view gave the impression that the whole process was a standard exercise
  42. This leads me onto the opening and concluding paragraphs of each claimant's first witness statement. It is plain that there are a number of initial paragraphs of the witness statements which are essentially identical in order to establish the purpose behind the statement and that seems to me to be entirely unobjectionable even if the statement is intended to be in each witness's own words.
  43. However, the final paragraphs of the witness statements are a different matter. They are not in exactly the same terms but there are a number of assertions made which, in my view, would be unlikely to be apparent in each witness statement without the guiding hand of the claimants' lawyers. To that extent it is perhaps doubtful as to the extent to which these are the claimants' words albeit that they rejected Mr Marven's suggestions that the paragraphs only appeared as a result of "closed" questions posed by the claimants' solicitors.
  44. For example, the statements repeatedly indicate that the claimant "now understand[s] that not all solicitors automatically deduct 25% of compensation at the end of the claim to pay for their costs." As a result of that understanding, the claimant says that they would have shopped around to see if another solicitor could have been obtained who would charge less money.
  45. The concluding paragraphs also generally reiterate a suggestion that the claimant felt pressured into signing documents with the solicitors' representative. In the witness box, it was Mr Moult whose evidence was the most stark to my mind. He told me that he feared that he would miss out on an entitlement to claim if he did not sign up there and then. This conversation was taking place only days after his accident. Whilst he might not be expected to understand about limitation periods, there was no suggestion from him that he aired this concern at any point with the defendant's representative. To my mind none of the witnesses were convincing in suggesting that they felt under pressure to sign. I got the distinct impression that the claimants were keen to get to the end of the process on the call but were given time to look at things if they wanted to do so. They were not pressured to complete the process.
  46. Indeed, it is notable that the one claimant who did not state at the end of her witness statement that she felt pressured into signing the agreement during the call is Chelsea Gwilliams. The only transcript of any of the "onboarding calls" where the claimants and a representative of the defendant discussed the retainer documents involves Ms Gwilliams and I turn to that call now.
  47. The transcript / onboarding

  48. A verbatim transcript of the call was provided to the court along with the recording itself. The transcript runs to 25 pages and the first 20 or so pages deal with the circumstances of the accident, the claimant's injuries, insurance details et cetera. At the end of that part of the conversation, the defendant's representative, described as "Shane" in the transcript, indicated that the defendant would like to represent the claimant and he wished to send documents through to Ms Gwilliams in order to "explain the key points" of those documents before proceeding. On being asked how long the explanation would take, Shane said that "it shouldn't take any longer than 10 minutes of your time."
  49. Ms Gwilliams considered that to be acceptable and so Shane sent an email containing a pack of documents whilst Ms Gwilliams remained on the call. She was able to see the documents being described to her. These involved a covering letter, a document concerning the insurance product and the CFA. In respect of the last of these documents the explanation went as follows:
  50. "S[hane]: Okay, right so if I can just direct you to the page with the pink border, it should say the Conditional Fee Agreement.
    CG: Yes.
    S: Okay, now this is a standard form of agreement used by solicitors in England and Wales in personal injury and litigation cases and this document simply confirms that we will be working on a "no win no fee" basis which actually means two things. So firstly it means that if we don't win, you will not be required to pay anything out of your own pocket and secondly, but more importantly, for you as the client, under this agreement if we fail to get you compensation then we do not get paid our basic costs. Now the Conditional Fee Agreement also outlines the success fee which is not an additional fee but it is included within the maximum 25% deduction and this is also where I need to make you aware that if any of the information you have provided is misrepresented, you dis-instruct us without our agreement or you fail to accept our advice, then you may become liable for our fees, costs and disbursements. As I'm sure you can appreciate we must make sure that we protect ourselves in these scenarios. Are you happy with that?
    CG: Yep, yes that's fine."
  51. Shane then moved on to the form of authority and signature elements of the pack. The time between the pack being emailed to Ms Gwillaims and her signing the documents electronically was 5 minutes and 7 seconds.
  52. Exhibited to the witness statement of Jade Ryan were three "Explainer" scripts from 2018, 2019 and 2020. They were the prompts used when taking new clients through the pack of documents. Ms Ryan joined the defendant in April 2020 and therefore she had no first-hand knowledge of the scripts for the period before she began her role as a team leader for the customer onboarding team. She had managed to locate the scripts for 2018 and 2019 in order to exhibit them to her witness statement. There were no scripts available prior to 2018 and obviously Ms Ryan had no first-hand knowledge before that date and which was the period during which at least some of the claimants had become clients of the defendant (the earliest being 2016).
  53. Ms Gwilliams' accident occurred in April 2020 and therefore the explainer script that was meant to be followed could be compared with the telephone call recorded with Ms Gwilliams. In particular, the CFA explanation given by Shane was more or less word for word the script for 2020. The same wording in respect of the CFA applied for the explainer script for 2019. In 2018, the phrase "the CFA also outlines the 'success fee' which is not an additional fee, but is included within the maximum 25% deduction" was a lengthier version as follows:
  54. "What I would like to do now is to explain to you in a little bit more detail, the costs involved in actually running your claim for compensation…
    If you could please look under the heading on the right-hand side titled 'Success Fee'.
    The Success Fee is a % that we add onto our basic charges in the event the case is successful. The amount of the success fee in any particular case is based on a number of risk factors involved in pursuing a claim for compensation, such as the prospects of success, the strength of the evidence in support of your claim and the length of time the case may take to complete.
    So just to be clear Mr/Mrs…this success fee is charged by us to you in a successful case but this fee is included within [the] 25% deduction from the final settlement."

    The evidence of the Defendant

  55. As mentioned above, the defendant only called one witness, Jade Ryan. Her evidence was produced to support the general procedures followed by the defendant when "onboarding" new clients and in particular to exhibit the explainer scripts that were meant to be used between 2018 and 2020 (at least). She could not give first hand evidence in respect of any of the individual cases as that was not her role at the defendant and indeed she was not employed by the defendant when most of the claimants' cases began.
  56. As with the claimants, I accept entirely that Ms Ryan sought to help the court with her evidence. However, her limitations as a witness were plain to see when compared with the possibility of someone in the role of "Shane", for example, dealing with the onboarding process. Ms Ryan's evidence came from a managerial view point rather than front line experience. Her comparatively recent arrival at the defendant was effective in blunting Mr Mallalieu's probing questions but they did highlight the lack of weight to be placed upon any criticisms of the individual claimants in her witness statement.
  57. How much detail needed to be given?

  58. During the so-called "costs wars" which took place in the first decade of this century, the information required to be given to the claimant by their solicitor was considered in great detail. In particular, the CFA Regulations 2000 proved fertile ground for challenge and numerous visits to the Court of Appeal as a result.
  59. The difficulties experienced in explaining the workings of CFAs led some academics and practitioners to suggest that a contingency fee agreement of the sort understood to be used in the USA, rather than a CFA, was preferable owing to its simplicity. Simply telling the client that the solicitor would be taking a share of the damages was, at least in principle, an easier discussion to have. In fact, the version of contingency fee agreements eventually brought into civil litigation by the Damages Based Agreements Regulations 2013 had to deal with the reality of recoverable costs and that simplicity of explanation was eroded as a result.
  60. At the same time as DBAs became possible, the recoverability of success fees in most cases ended and the CFA Regulations 2013 also introduced a restriction on the extent of the costs the solicitors could seek from their clients in personal injury litigation. As such, a 25% cap came into being. This had originally been suggested by the Law Society as good practice prior to success fees becoming recoverable but it does not appear to have been relevant during the period of recoverability.
  61. This restriction clearly provided protection for consumers but, perhaps unwittingly, at the cost of increased complication. With one stroke, the solicitors had to explain to their clients a two stage process, both with percentages but not percentages of the same thing. Previously, the solicitors could simply describe the success fee as being a percentage of the base costs i.e. the hours that they had worked at the agreed hourly rates. They could explain why the percentage had been set and set out reasons for so doing in the agreement.
  62. From 2013, the solicitors needed to describe this percentage of the base costs and the reasons for setting it before going on to describe a percentage of the damages which capped the previous percentage figure (or rather the absolute sum produced by that percentage). A further complication for the client would be that the damages figure was only comprised of certain kinds of damages and not simply everything that the client received following an agreement or a court award.
  63. It is noticeable in the 2018 script exhibited to Jade Ryan's witness statement that there is a description of the first percentage i.e. of the base costs being referred to as well as the second percentage regarding the cap on damages. The subsequent scripts reduced the explanation so that it centred squarely on the worst outcome for the client i.e. the maximum percentage of the damages to be paid to the solicitors. It no longer sought to describe the success fee as being based on the risk to the solicitors of bringing the claim on behalf of the client.
  64. During the course of the evidence, it became apparent that there was a stark difference between the parties as to the information that needed to be provided to the clients by the solicitors. That difference was essentially a reflection of the change in the script that I have just set out. The claimant's contentions, as described by Mr Mallalieu and the revised points of dispute, expected a detailed description of the workings of the CFA. Such description would not only set out how the success fee was to be calculated by reference to the risks in the case, but also a number of other aspects of the CFA such as whether the costs recoverable from the opponent were fixed and the impact that would have on the difference between the costs actually incurred and those that could be recovered from the opponent. The resulting shortfall being potentially a concern of the clients.
  65. The defendant's approach was to emphasise the central aspects of the CFA and to leave the remainder to the clients to read from the documentation provided. The description in the script of explaining the "key points" plainly implies that the oral description only covered the points the solicitors considered to be the most important. As can be seen from the passage from the script set out at paragraph 42 above, the key information regarding the CFA was (i) that if the case failed, the client would not be liable to pay any costs i.e. a no win, no fee agreement; (ii) if the client was successful then the maximum they would pay from their damages to the solicitors would be 25%; and (iii) if the agreement came to an end during the course of the claim then the client might be liable for the solicitors' charges in certain circumstances.
  66. A number of the preliminary issues concern the information provided to the client and whether or not the client could be expected to have seen and understood the terms of the agreement. In the circumstances, it seems to me to be necessary to conclude, as a preliminary matter, what was the key information that needed to be provided.
  67. Leaving aside the question of whether some of the terms in the documents were internally inconsistent, as alleged by the claimants in preliminary point 4, the terms of the CFA and other documentation appear to be comprehensive in setting out the rights and obligations of the parties. The only omission explicitly criticised by Mr Mallalieu for being absent was a reference to Section 74(3) of the Solicitors Act 1974. That provision relates to proceedings in the County Court and says that a solicitor on the assessment of their bill of costs is limited to such sum as may have been allowed between the parties. Particularly, where the recoverable costs are fixed, it is likely to prove to be a lower sum than the solicitor might otherwise charge their client.
  68. S74(3) goes on to say that this limitation may be circumvented by a rule of court. CPR 46.9(2) says that the solicitor and client can enter into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than the client could have recovered from another party in the proceedings. Absent such an agreement, section 74(3) will apply.
  69. Mr Mallalieu is correct in saying that there is no reference to section 74(3) in the documentation concerning those claimants who brought proceedings. (It is not relevant if there have been no proceedings and I note that, in any event, reference to section 74(3) does occur in some of the later CFAs). Nevertheless, as Mr Marven submitted, there are numerous references to the client being liable to the solicitor for their costs and that some of those costs may be recovered from the opponent. For example, the first paragraph under the heading "paying us" in the CFA says:
  70. "If you win your claim you are responsible for your legal costs. These include our basic charges and disbursements, some of which may be recovered from your opponent. They may also include an insurance premium you have agreed to pay and our success fee."
  71. It seems to me that the question of whether section 74(3) bites in this case is a good example of the difference between the parties concerning the key information to be brought to the claimants' attention. The defendant refers to the general terms in the agreement to demonstrate that "a written agreement" between the parties applies and therefore CPR 46.9 is satisfied. The claimants, on the other hand, submit that nothing less than an explicit reference to the section of the Act would be sufficient to enable the client to provide informed consent of that provision.
  72. The case law regarding the explanation of the terms of CFAs petered out after the CFA Regulations 2000 were revoked in 2005. Consequently, there has been little, if any, guidance on the depth of explanation required to be given to a client in more recent times. Mr Marven referred to the dicta of the Court of Appeal in Herbert v HH Law Limited [2019] EWCA Civ 527 which, at paragraph 48, described the paperwork there as providing "a clear and comprehensive account of [the client's] exposure to the success fee and HH's fees generally." The only aspect on which HH Law Limited fell down was in deciding to seek a success fee of 100% in every case from their client without any regard to the risks of the individual case and without explaining that to the client.
  73. In this case, the CFA documentation is in a standard format which has now been used for many years. Whilst all agreements tend to be different to some extent, I have no reason to think that the wording of the CFAs and associated documents in these cases is materially different from, for example, the CFA in Herbert (other than the risk assessment). The success fees here are supported by a risk assessment and, based on the test cases, there is no policy of claiming a single stage 100% success fee in every case. As a starting point therefore, the claimants appear to have been provided with a perfectly good description of how their agreement works in the manner generally approved by the Court of Appeal in Herbert.
  74. As I have described above, the reality is that the claimants did not trouble to consider the documents they had received any further after the telephone explanation. This can be explained to some extent by their collective view that the agreements were in a standard form and therefore would have been the same if they had gone to another firm of solicitors.
  75. But this does not assist the claimants in saying that they should have been provided with a more detailed oral description of the documents they were being requested to sign. First, the need for oral explanations to prevent unenforceability was reduced originally in 2003 and then revoked in 2005 in terms of the secondary legislation. Secondly, there is no reason given by the claimants as to why a long and detailed oral explanation of the documents was necessary in addition to the wording of the documents themselves.
  76. As the discussion of "Shane" with Ms Gwilliams makes clear, the amount of time a potential client would be prepared to devote to an oral explanation of the documents is likely to be limited. The impression given by the other witnesses was of a similar wish to deal with matters expeditiously.
  77. Ms Ryan said that she thought the explanation ought to take 15 minutes and Mr Mallalieu made the most of the discrepancy between that period and the time actually recorded for the calls. According to a table in the points of dispute, which I did not understand to be challenged, all of the explanations were under 10 minutes and some were under two minutes. In my view the more cogent evidence on the time the explanation should take is that of Shane who explained the pack to Ms Gwilliams and who said at the time that it would take no more than 10 minutes.
  78. Mr Mallalieu submitted that the variation in the length of time that the calls took led to the inference that the explainers were likely to be missing chunks of the script out. As such, the defendant could not rely on the script as providing a satisfactory explanation (not that the claimants accept that even a full reading of the script would do that.) An alternative theory was aired during the hearing that the claimants simply pressed the signature button more quickly on some occasions than others – so that they had already signed whilst the explanation was being given. I do not think I can draw any of the suggested inferences. There was no evidence to suggest that any of the claimants had signed before being asked to do so. The one transcript (see below) showed the explainer sticking religiously to the script. There is no obvious reason why someone whose job is to follow the script would seek to do something else when they know that the calls are monitored.
  79. In fact, the key question regarding the time needed to explain the documents, in my judgment, goes back to a consideration of the amount of detail to be provided on what are described as the key points. In my view, it is relatively simple to describe a CFA in the manner described by Shane in terms of what happens if the client wins, loses or otherwise terminates the retainer. A description which goes into more detail about the workings of a CFA runs into the danger of getting into the weeds of matters such as the indemnity principle and which would then involve the peril of potentially confusing the client rather than clarifying issues to them.
  80. In my judgment, the combination of an oral explanation of the key terms in a simple fashion together with provision of a comprehensive written agreement was a perfectly appropriate method for informing the client of the component parts and signing them up in a businesslike manner. From the evidence given by the claimants in the witness box, in my view they understood the key information given in the oral explanation. Some, such as Ms Gwilliams and Mr Rabinovitch, were still clear on those terms when giving evidence and their concerns with the defendant's charges involved other matters. Mr Moult, in my view, had forgotten about the charge for the ATE policy but accepted it had been clear in the documents and I consider it would have been equally clear to him at the time of signing. I have described my concerns with the difference in Ms Webber's evidence on this point at paragraphs 30 to 32 above.
  81. The one issue which has altered over the time of the use of CFAs (in personal injury cases) is the capping of the recoverable costs from the client so that there are two percentages to be explained to the client. Whilst I am not keen on the prospect of the success fee based on the risks of the case and calculated as against the base costs being downgraded as a key piece of information, I take the view that the key term in respect of a successful claim is the one which explains the worst potential outcome to the client. This is the percentage cap on damages prescribed by the CFA Regulations 2013 and not the original percentage uplift on the base costs.
  82. I now turn to the nine preliminary issues. The first, italicised paragraph under each heading sets out the essence of the issue as described from the claimants' viewpoint and by reference to paragraph 38 of Mr Mallalieu's skeleton argument for this purpose.
  83. Preliminary issue 1

  84. Is a CFA which provides for an effective contractual cap on recovery by reference to the damages a claimant might receive (as here) a Damages Based Agreement within the meaning of section 58AA(3) Courts and Legal Services Act 1990 ("the 1990 Act") and, as such, is unenforceable?
  85. Section 58AA(3) states that, for the purposes of section 58AA:
  86. "(a) a damages–based agreement is an agreement between a person providing advocacy services, litigation services or claims management services and the recipient of those services which provides that –
    (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and
    (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained;"
  87. The claimants say that the CFAs signed by them in these cases are in fact DBAs but do not comply with the secondary legislation relating to DBAs and as such are unenforceable as against the claimants.
  88. In support of this argument the claimants refer to a paragraph from the retainer documents (specifically the page headed "The Insurance Product") which, under the heading "25% Global Cap" says:
  89. "The conditional fee agreement will ensure a cap on deductions from your damages at 25% in successful claims. If your legal fees (including unrecovered costs and disbursements, along with your success fee plus VAT) due to Your Solicitor total more than 25% of your damages, you will not be asked to pay the difference. If your claim is successful the premium may be payable in addition to the maximum 25% of damages to be contributed by you towards your fees and disbursements."
  90. Mr Mallalieu also relied upon the quotation from the CFA under the heading "Paying Us" which said:
  91. "[providing you have insurance or indemnity arrangements], if there is a shortfall between the fees recovered from Your Opponent and your Legal Costs the maximum you will be required to pay Us for our fees over and above any sum recovered from Your Opponent shall not exceed a sum equivalent to 25% of the damages you have received. The cost of the insurance premium may be payable in addition."
  92. In the light of these two passages, Mr Mallalieu submitted that the requirements of section 58AA(3) were met in that it was an agreement for advocacy and litigation services; the client was to make a payment to the solicitor providing those services if they received a specified financial benefit; and the amount of that payment was determined by reference to the amount of that financial benefit.
  93. The essence of the claimants' argument is that the mechanism underpinning the agreement entered into by the defendant with the claimants was geared to achieve a payment by each claimant of 25% of their damages in addition to the costs recovered from the opponent. The cases were of a relatively low value in terms of damages and once the hourly rates charged by the defendant were multiplied by the number of hours required to pursue the case, the "shortfall" between the sums recovered from the opponent and the costs actually incurred, together with the success fee, would always justify the solicitors in deducting 25% of the damages.
  94. The claimants' point of dispute also relied upon a practice note produced by the Law Society in 2010 which appeared to accept the possibility that a conditional fee agreement might also amount to a DBA. That practice note was updated in 2011 but withdrawn in 2013 when the DBA Regulations 2013 superseded the 2010 Regulations. At that point, DBAs became effective in civil proceedings and not simply in employment tribunal claims as had been the case under the earlier regulations. It does not seem to me that this document advances the claimants' case. It is simply the Law Society's view of the status of agreements at the time and was withdrawn when the options for claimants were widened to include DBAs as well as CFAs.
  95. Mr Mallalieu sought to pre-empt Mr Marven's inevitable challenge on behalf of the defendant that, if the claimants were correct, all seemingly compliant CFAs would be turned into non-compliant DBAs and therefore make them unenforceable between the solicitor and client. Mr Mallalieu disputed the effect of his argument would be to turn all personal injury CFAs into unenforceable DBAs. He narrowed it simply to those cases where there were (i) low value damages and (ii) the approach used here by the defendant (in terms of hourly rates etc). The focus on the 25% cap rather than an explanation of all of the details required to explain the success fee properly indicated that the defendant was treating these agreements as DBAs in any event.
  96. Decision

  97. The law of unintended DBAs was given force by the Supreme Court in its decision in PACCAR [2023] UKSC 28. There, agreements which were described as litigation funding agreements, were found also to be DBAs given their compliance with section 58AA and in particular by reference to "claims management services".
  98. No reliance is placed upon PACCAR by the claimants, at least expressly, and we are clearly in a different situation where agreements comply with one part of the 1990 Act (section 58 and section 58A) but do not comply with another (section 58AA). In my judgment, there is simply no room to argue that an agreement which complies with the regulations it was intended to meet can be rendered unenforceable in any way by non-compliance with separate regulations intended to meet a different form of agreement.
  99. The claimants' argument is based entirely on the proposition that these agreements are designed to take 25% of the claimant's damages, come what may. There is no direct evidence to support this proposition. The documentation refers to the deduction being "up to 25%" as, for example, Mr Rabinovitch very fairly accepted under cross examination. The claimants need an adverse inference to be drawn from the use of an agreement where base costs are calculated on time spent multiplied by an hourly rate. But, that is the standard method of all solicitors charging fees. Even where a fixed fee is agreed, the underlying documentation invariably sets out default charges by reference to time spent which is overridden where a fixed fee has been agreed. In my judgment, there would need to be some express statement or documentation regarding an intention to incur costs which justify the 25% deduction on each case for this argument to get off the ground. In their absence, it does not seem to me that this point gains any traction.
  100. I have therefore not troubled to set out Mr Marven's arguments specifically. They accord with the comments I have just made. As he pithily put it, if the claimants were right, all DBAs would be unenforceable CFAs as well as all CFAs being unenforceable DBAs which would create "horrific consequences". He was right to describe them as such. On a purely numerical basis of cases affected, the outcome contended for by the claimants would dwarf the practical issues which arose in the aftermath of the PACCAR decision. The line Mr Mallalieu sought to draw to limit this effect was, to my mind, of the Maginot variety.
  101. Preliminary issue 2

  102. Does the defendant's signing up process comply with Regulation 14 of the Consumer Contracts (Information, Cancellation and Additional Charges Regulations 2013 ("the 2013 Regulations")?
  103. This point was no longer pursued following evidence being given by the parties.
  104. Preliminary issue 3

  105. Has the defendant complied with its obligation to provide the relevant information listed in schedule 2 in a clear and prominent manner pursuant to Regulation 14 of the 2013 Regulations and/or provided the information in a clear and comprehensible manner pursuant to Regulation 13 so that there is an enforceable right to charge the claimants?
  106. Regulation 14 of the 2013 Regulations states, under the heading "Requirements for distance contracts concluded by electronic means":
  107. "(1) This regulation applies where a distance contract is concluded by electronic means."
    (2) If the contract places the consumer under an obligation to pay, the trader must make the consumer aware in a clear and prominent manner, and directly before the consumer places the order, of the information listed in paragraphs (a), (f), (g), (h), (s) and (t) of Schedule 2.
    (3) The trader must ensure that the consumer, when placing the order, explicitly acknowledges that the order implies an obligation to pay.
    (4) If placing an order entails activating a button or similar function, the trader must ensure that the button or similar function is labelled in an easily legible manner only with the words "order with obligation to pay" or a corresponding unambiguous formulation indicating that placing the order entails an obligation to pay the trader.
    (5) If the trader has not complied with paragraphs (3) and (4), the consumer is not bound by the contract or order."
  108. Regulation 13 of the 2013 Regulations says:
  109. "Before the consumer is bound by a distance contract, the trader-
    (a) must give or make available to the consumer the information listed in Schedule 2 in a clear and comprehensible manner, and in a way appropriate to the means of distance communication used…"
  110. Schedule 2 requires the following information to be provided in the lettered paragraphs referred to in Regulation 14(2):
  111. "a) the main characteristics of the goods, services or digital content, to the extent appropriate to the medium of communication and to the goods, services or digital content;
    …
    (f) the total price of the goods, services or digital content inclusive of taxes, or where the nature of the goods, services or digital content is such that the price cannot reasonably be calculated in advance, the manner in which the price is to be calculated,
    (g) where applicable, all additional delivery charges and any other costs or, where those charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;
    (h) in the case of a contract of indeterminate duration or a contract containing a subscription, the total costs per billing period or (where such contracts are charged at a fixed rate) the total monthly costs;
    …
    (s) the duration of the contract, where applicable, or, if the contract is of indeterminate duration or is to be extended automatically, the conditions for terminating the contract;
    (t) where applicable, the minimum duration of the consumer's obligations under the contract;"
  112. The claimants' challenge under this preliminary issue, as formulated in the revised points of dispute, is that the defendant has failed to make the consumer aware in a clear and prominent manner, the information contained in the lettered paragraphs of Schedule 2 before the client had entered into the agreement. Furthermore, the defendant had failed to provide that information in a clear and comprehensible manner. The effect of failing to comply with regulations 14 and 13 respectively means that the claimants are not bound by the agreements.
  113. In the oral submissions, it was common ground that there was no authority on the question of what "bound" meant in these regulations. Mr Mallalieu submitted that this was in line with s62 CRA 2015 which is raised in preliminary issue 7. Mr Marven's argument in respect of section 62 was that, even if any of the terms fell foul of that provision, it was only the term which fell down and not the contract itself.
  114. Paragraph 22 of the revised points of dispute describes the failings alleged against the defendant as being that the pack sent to the claimants did not present the information in a clear, comprehensible and prominent manner at all. Rather it presented a dense collection of difficult to follow closely typed documents, which in places contained ambiguous and apparently contradictory information.
  115. Documentation in the pack did not clearly set out the manner in which the price the claimant would be liable to pay would be calculated. The information regarding the basic charges, disbursements and success fee were spread across three different documents, the CFA itself, the "What You Need To Know" sheet and the terms of business. The claimants contend that the pack did not clearly set out the total or likely total costs per billing period and there was no evidence of any attempt to provide further explanation of these matters directly before the claimant agreed to the retainer. To the contrary, the receipt of the pack by the claimants and the request for the claimant's signature by the defendant, was so close in time as to give no reasonable opportunity to read the document before signature took place.
  116. The replies to the points of dispute (combined at points 2 and 3) denied the information was provided in anything other than a clear and prominent manner and was clear and comprehensible. The argument is made that the purpose of the regulations is to prevent a consumer unintentionally becoming bound by the contract. As such a failure to provide any of the information in the regulations prevents a consumer being held to be bound by any inadvertent error. Once the contract had been performed however, the claimants were subsequently bound by conduct in accepting the defendant's services and/or giving them instructions and/or receiving and accepting the damages secured by the defendant.
  117. This argument led to the proposition that, even if the claimants were never bound to the terms of the retainer, the solicitors would still be entitled to be paid a quantum meruit. Moreover, the claimants were unable to decline to pay for the services as they had already discharged their payment obligations. There could be no restitutionary action in circumstances where the claimants had received the benefit of the services provided.
  118. More fundamentally, according to the defendant, any failure to comply with Regulation 14(2) of the 2013 Regulations could not affect the validity of the retainer. The only consequence of a breach would be via an enforcement authority applying for an injunction to enforce compliance. Any failure to comply with Regulation 14 would not affect the reasonableness of the costs claimed and as such was irrelevant to any assessment of the bill. The defendant also pointed towards the cancellation period of 14 days enjoyed by the claimants as their statutory right to cancel.
  119. In any event, the defendant's central argument was that the information was provided in a comprehensive fashion. It set out the manner in which the price would be calculated in terms of time spent and hourly rates for the base costs to be claimed on those base costs by way of success fee. The complaint about the costs "per billing period" was described as being "unreal" since there were no multiple billing periods in accordance with the usual practice in respect of CFAs. To the extent that the entire contract was described as a billing period than the manner of calculating the costs was set out clearly.
  120. The reply to the revised point of dispute challenged the suggestion that the claimant had no opportunity to consider documents before signing. It was said to be entirely a matter for the claimants as to when they decided to sign the claims pack (if at all). There was no suggestion that the claimants were time-limited in terms of the oral explanation. The defendant also widened this submission to challenge the absence of any fact specific complaints regarding the alleged lack of clarity.
  121. Decision

  122. The strength of the claimants' challenge under this preliminary issue depends upon the extent of the information that needed to be provided to them in the signing up process. I have already concluded that the amount of oral explanation required was much more limited than the claimants contend for and that the detail of the workings of the CFA and other documents was contained in the documentation.
  123. The "main characteristics" of the service provided were plainly the legal services to bring the claim. In response, the claimant was obligated to pay the base fees, disbursements and success fees in the event the case was successful and subject to any sums capable of being recovered from the opponent. Such obligation to pay was limited to 25% of the claimant's damages. In the event the claimant was unsuccessful, the claimant was under no obligation to pay the solicitors either in respect of their own charges or their disbursements.
  124. This information was provided by the oral explanation giving the key points of the contract and was set out in more detail in the documentation itself. I am in agreement with Mr Marven's comment regarding the claimants' case that here the complaint is that there are too many references spread over too many documents for the claimants reasonably to understand the key points. In many of the other claimants' arguments, it is said that too little information is provided at any point and, in particular, orally.
  125. The combination of the CFA, the What You Need To Know document and terms and conditions regarding general matters in the retainer is a commonplace arrangement. For example, see Constable J's decision in Saint James v Wilkin Chapman [2024] EWHC 1716 (KB) where the same three documents were considered in circumstances where the terms did not mesh.
  126. Although a similar argument is put forward here by the claimants, in my view the key information is provided entirely consistently regarding the recovery of some of the costs from the opponent subject to a maximum 25% deduction from damages. I do not think reference to the key information in the various documents is either surprising or the cause for criticism in the manner put forward by the claimants. Having received this information both orally and via documentation, it seems to me plain that the information has been provided in the clear fashion expected by Regulations 13 and 14 (including Schedule 2.)
  127. As such, I do not need to deal with the defendants fall-back positions regarding quantum merit et cetera. I simply record that Mr Mallalieu referred to Diag Human SE v Volterra Fietta (a firm) [2023] EWCA Civ 1107 in this context. Whilst Mr Marven indicated his view that it was off the point, it certainly does suggest that the prohibition on quantum meruit claims by solicitors where their CFA has proved unenforceable continues to be in force as a matter of public policy.
  128. Preliminary issue 4

  129. Was there a failure to provide clear and proper information to the claimants as to the price they were likely to be required to pay for the services and how that price would be calculated in accordance with Regulation 13 of the 2013 Regulations?
  130. Mr Mallalieu sought to deal with this preliminary issue together with issues 7 and 3 (in that order). Having got to preliminary issue 4, he told me that there was no decision that I needed to make based on that preliminary issue in this judgment. It was, in essence, a point made towards the line by line determination.
  131. Consequently, I have not set out the passages from the CFA, the What You Need To Know document and terms of business cited in the point of dispute although I have, in any event, quoted similar passages from these documents elsewhere. The claimants' argument from these passages is synthesised at paragraph 27 of the revised points of dispute in the following terms:
  132. "The information provided to the Claimants was ambiguous and unclear. In parts it appeared to state that the Claimants would have an unlimited liability for unrecovered costs. In others it referred to liability for any shortfall in 'fees' being limited to 25% of damages, whilst elsewhere stating the Claimant's liability for costs was not limited by reference to damages. Yet elsewhere it appeared to state the Claimant's liability for costs would be limited so that it could not exceed 25% of damages and in any event could not exceed sums recovered from the opponent."
  133. There was one new aspect in respect of the 2013 Regulations raised by this point. At paragraph 29(ii) of the revised points of dispute it is alleged that the failure to provide proper information is a material circumstance in the assessment of any costs said to be payable by the claimants in respect of the statutory bills. That point applied whether or not proceedings had been issued. Furthermore, the presumptions in CPR 46.9(3) should be disregarded given the claimants' inability to provide informed consent where such ambiguous and unclear terms had been provided.
  134. Mr Marven followed the reply to the points of dispute in rejecting the suggestion of ambiguity and lack of clarity in the cited passages. But even if there were any such problems with the language, he submitted there was no sanction to be applied. At most, if the presumptions as to reasonableness were disapplied, the defendant would simply have to demonstrate the reasonableness of the charges in the bills.
  135. Preliminary issue 5

  136. In relation to the claimants with issued claims, did they give their informed consent to the charging of sums in excess of those which the client could have recovered from the opponent to the claims? Alternatively was the success fee and/or any charge above the fixed recoverable costs figure an item of an unusual nature within the meaning of CPR 46.9(3)?
  137. CPR 46.9(2) and (3) are relevant to the arguments in this preliminary point and are as follows:
  138. "(2) Section 74(3) of the Solicitors Act 1974 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.
    (3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –
    (a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;
    (b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;
    (c) to have been unreasonably incurred if –
    (i) they are of an unusual nature or amount; and
    (ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party."
  139. I have previously referred in this judgment to the written agreement between a solicitor and their client under CPR 46.9(2) as a method of circumventing the effect of section 74(3) Solicitors Act 1974. I concluded that there was such a written agreement between the parties by reference to the documentation which plainly set out that not all of the costs incurred by the client would be recoverable from the opponent. The resulting shortfall had to mean that the client accepted that the costs being incurred were not limited to those which could be recovered from the opponent.
  140. Under this preliminary point, the claimants argue that the terms of the written agreement are vitiated by the lack of any informed consent. They say that there was a failure to provide any or any proper information as to whether fixed recoverable costs were likely to apply to the claimants' claims. If they were, there was a failure to compare the level of such costs to the amount the claimants were likely to be liable to pay. In the claimants' submission such a failure could not be cured by reference to the shortfall cap by reference to damages.
  141. Furthermore, if fixed costs did apply then charges on an hourly rate basis were likely to exceed those fixed costs and that would be directly relevant to whether any shortfall was charged and whether that shortfall might reach the level of the cap. Without that information, the claimants could not give informed consent to the charging of any shortfall against them, whether capped or otherwise.
  142. In respect of the success fee, it is said that there was a failure to provide any information about the complete lack of recovery of it. Again, in the absence of such information, the claimants were not in a position to give any properly informed consent to its being charged against them.
  143. The result of these failures, according to the revised points of dispute, is that the costs chargeable to the claimants are limited to the costs that could have been allowed on a between the parties' basis. Since the success fee was not recoverable between the parties it would not be recoverable at all from the claimants either.
  144. As an alternative argument, the claimants say that the success fee is an item of costs of an unusual nature and in the absence of a clear explanation to the claimants that the success fee was irrecoverable between the parties, then it was unreasonably incurred. Finally, the charging of costs on an hourly rate basis in a low value personal injury claim where fixed costs were likely to apply is also an item of cost of an unusual nature or unusual in amount and so should be deemed to have been unreasonably incurred.
  145. The replies (and Mr Marven's submissions) put forward a spirited argument to suggest that section 74(3) simply does not apply where fixed recoverable costs are involved. The argument relates to the scales of costs that were applicable at the time of the latest incarnation of the Solicitors Act and which it is said were the obvious limitation of costs between solicitor and client in such circumstances rather than the scales otherwise applicable between solicitor and client. Furthermore, the Act talks of an assessment of the solicitors' costs and where there are fixed costs, no such assessment applies.
  146. Whilst I admire the ingenuity of these arguments, I do not think that they apply. The County Court scales went out of existence in 1999 with the advent of the CPR, and although the Solicitors Act has been amended to replace the word taxation with assessment in various places as a result, there has been no amendment to the essential approach of section 74(3) since the ending of the County Court scales. They have therefore applied where the costs have been assessed on the standard (or indeed indemnity) basis between the parties and those between the parties' costs would generally be considered to be less than the costs payable by the client to their own solicitor on a solicitor and client assessment. Therefore, whether or not fixed or scale costs applied, there was still a potential restriction on the costs to which the solicitors would be entitled as against their client.
  147. Nor do I consider the word "assessment" to have any limitation in the form of the quantification of costs in this context. As I have said, the word taxation preceded 1999 when the scale costs were applied and therefore the predecessor to assessment related to fixed costs just as much as it did to, what we would now call, assessed costs. The new Section X in Part 45 uses the word "determination" rather than assessment but there is nothing to suggest that it is not essentially the same process of quantifying the entitlement of the receiving party to the appropriate amount of costs. In my view, section 74(3) is intended to act as a restriction on the costs between solicitor and client to the amount, perhaps notionally (where for example the client had been unsuccessful), to be paid between the parties by whatever method those between the parties' costs were quantified.
  148. The defendant's fall-back position is that the section has been disapplied by the written agreement of the parties in the manner described above. In response to the claimants' argument regarding informed consent, the defendant raises two points.
  149. The first is that it disputes there is any requirement for informed consent in respect of CPR 46.9(2). Unlike CPR 46.9(3), there is no indication that any form of approval is required for the written agreement to have effect.
  150. The second point is to challenge the assertion by the claimants that the information was not clearly and comprehensively set out. There would be no benefit, in the defendant's submission, for a detailed explanation of the fixed costs regime then in place under CPR Part 45 (which has since been radically recast). Any such explanation would have produced an overly long and unwieldy document which, in reality, no claimant would be likely to have read. The important position was for the claimant to be told the overall position in respect of the damages deduction and to have agreed to it. The defendant also points to the Court of Appeal's dicta in Herbert describing the arrangements in that case as providing a clear and comprehensive account of the client's exposure to the success fee and the solicitors fees generally.
  151. The defendant also disputed that the success fee is unusual in nature within the meaning of CPR 46.9(3). But, in any event the claimants were told that it was not recoverable from the defendant. Similarly the defendant denied that the use of hourly rates where fixed recoverable costs might apply was unusual, either in nature or amount.
  152. Decision

  153. In my view, section 74(3) applies in principle to the agreement between the claimants and the defendant where proceedings have been commenced in the County Court. As I understand it, this applies to five of the test claimants. There is a written agreement between the parties which satisfies CPR 46.9(2) and therefore entitles the defendant to claim more than would be recoverable between the parties in those County Court proceedings. The only question is whether informed consent is required and if so was it provided?
  154. In the Court of Appeal's decision in Belsner v Cam Legal Services [2022] EWCA Civ 1387, the Master of the Rolls concluded that the work done was non-contentious because proceedings had not been commenced in the County Court notwithstanding the use of the online portal process. As such, section 74(3) did not apply and therefore CPR 46.9(2) was rendered nugatory. At paragraph 69 of the judgment, the Master of the Rolls stated that the court below was wrong to think that the client's informed consent was required in that case given the wording of CPR 46.9(2). It does not seem to me that the Master of the Rolls sought to give any guidance as to whether cases where proceedings have been brought (and so s74(3) and CPR 46.9(2) are relevant) do require informed consent for CPR 46.9(2) to be satisfied. That question appears simply to be part of the "unsatisfactory consequences" of the wording of the Solicitors Act 1974 to which he referred.
  155. By contrast, the Master of the Rolls (at paragraph 67) found that CPR 46.9(3) does apply, whether the work is contentious or non-contentious, and that informed consent is required in respect of the presumptions in that rule.
  156. As I have noted, the defendant says that there is a difference in the wording between CPR 46.9(2) and 46.9(3) with only the latter rule requiring the approval of the client. I am not entirely persuaded that the difference between the language of agreement and approval in the two provisions is sufficient to answer the question of whether informed approval is needed. But, it seems to me that it is a signpost towards the difference in the two provisions. Belsner makes clear (at paragraph 74) that there is no fiduciary duty upon the solicitor when entering into the retainer with the client because the client has no reasonable expectation that the solicitor will not be negotiating the terms of that retainer in his own interests. Thereafter, the solicitor is likely to owe fiduciary as well as other duties during the course of the retainer.
  157. Similarly, providing in the terms of the agreement that the effect of s74(3) is to be excluded is, in my judgment, part of the negotiation. After all, it can hardly be said to be unusual for solicitors to say to putative clients that their fees will be charged on a time spent basis and that if there is successful litigation, some of those costs are likely to be recovered from the opponent. Reducing that to writing would be expected. Such agreement is sufficient for the purposes of CPR 46.9(2).
  158. Once the retainer begins, the solicitors are expected to obtain express or implied approval of their actions. That approval requires the consent to be informed (or for it to be inferred if the approval was implied). If the solicitors fail to gain that approval in respect of unusual expenditure, they run the risk of an adverse presumption applying in CPR 46.9(3).
  159. Whilst it is true to say that something such as the hourly rates provisions are agreed in the negotiation of the retainer, they apply – and may be amended – during the retainer and if they are unusual and unlikely to recovered, then informed consent is still required, in my view.
  160. For these reasons, I do not consider that the claimants had to provide informed consent rather than mere agreement to the fees being paid by them exceeding the costs that might be recovered in a successful claim. It seems to me that this conclusion disposes of the claimants' arguments regarding fixed recoverable costs.
  161. I have set out elsewhere in this judgment my view that a time spent or hourly rates agreement with a client is the most common basis for a retainer, even if a fixed fee is agreed with the client (and not simply potentially recoverable from an opponent.) As such, I do not consider such an agreement to be unusual in nature or amount. With regard to the question of whether the success fee was unusual in amount or extent, I have dealt with these arguments specifically in my decision on preliminary issue 8.
  162. Preliminary issue 6

  163. In relation to the claimants with unissued claims, do the same or similar points as in preliminary issue five arise?
  164. In the revised points of dispute, this point repeats and relies upon the points made at preliminary point 4. Since that point was described as being a "card marker" pending the line by line assessment, it was perhaps not surprising that Mr Mallalieu described this point in similar terms. In any event, it only applies to some of the test cases.
  165. As the revised point of dispute makes clear, where the proceedings were not issued, the assessment will, strictly speaking, take place in accordance with the Solicitors (Non-Contentious Business) Remuneration Order 2009 rather than CPR 46.9. However, given the nature of these cases, my expectation is that, as submitted by Mr Marven, there will be little difference in the method of assessment in practice notwithstanding that ultimately in respect of these cases the court has to decide what is "fair and reasonable".
  166. There is no prospect of any arguments regarding s74(3) applying in respect of these 5 cases. As Belsner made clear, it has no application to cases which have not been brought before the County Court.
  167. Preliminary issue 7

  168. Were terms as to payment and the claimants' liabilities in the CFAs provided in a transparent and prominent manner? If not, are the terms fair in accordance with section 62 of the Consumer Rights Act 2015?
  169. Section 62 of CRA 2015 deals with unfair terms and unfair consumer notices. Insofar as it relates to terms, the following is relevant:
  170. "(1)An unfair term of a consumer contract is not binding on the consumer.
    …
    (3)This does not prevent the consumer from relying on the term or notice if the consumer chooses to do so.
    (4)A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer.
    (5)Whether a term is fair is to be determined—
    (a)taking into account the nature of the subject matter of the contract, and
    (b)by reference to all the circumstances existing when the term was agreed and to all of the other terms of the contract or of any other contract on which it depends."
  171. Section 64 CRA 2015 provides an exemption from the court's assessment of the fairness of terms under section 62. In order to come within the terms of section 64, the term must involve the main subject matter of the contract or the appropriateness of the price payable under the contract. Furthermore, the term needs to be "transparent and prominent."
  172. A term is "transparent" if written in "plain and intelligible language" and is "prominent" if it is "brought to the consumer's attention in such a way that an average consumer would be aware of the term."
  173. The claimants' argument is simply that the terms in the document pack were not drafted in suitably plain language and were buried in lengthy and complex documents requiring a considerable amount of "legal mining", to use Mann J's vivid phrase in The Office of Fair Trading v Foxtons Limited [2009] EWHC 1681 (Ch), where he said that "the obligation is one which requires some legal mining to bring it to the surface, and the typical consumer is not a miner for these purposes."
  174. The claimants say that the unfair terms were the ones which required them to pay sums in excess of the likely recoverable costs. They caused a material imbalance in the rights of the claimants in favour of the defendant and the base costs should be limited to no more than the sums recovered from the opponent.
  175. Mr Marven contended that the claimants had not specified any terms which they said were unfair. This was not a criticism set out in the replies which, instead concentrated on the point made in the previous paragraph, i.e. that the claimants' challenge concerned payment of costs over and above those that might be recovered.
  176. Decision

  177. In an earlier part of the judgment I have discussed the two sides' arguments regarding the extent of the key information that needed to be conveyed to the claimants and I concluded that I preferred the defendant's approach. Mr Mallalieu's submissions regarding the extent of the terms that needed to be brought to the claimants' attention were particularly forceful here. If I had preferred the claimants' approach, it would certainly have been open to me to conclude that the lengthy pack of documents might have needed some legal mining to understand all of the moving parts of the agreement. There would certainly be elements, such as the risk assessment for the success fee, which did not feature in the explainer script (other than a passing mention in some cases) which would be vulnerable to the argument that they were not prominently displayed.
  178. Furthermore, some of those elements, even though they would be important in themselves, would not form the core of the agreement so that the "safe harbour" provisions in section 64 would not be open to the defendant in any event. The Glaser KC v Atay [2024] EWCA Civ 1111 decision has highlighted the need for the terms to be central to the contract.
  179. However, the key terms regarding successful and unsuccessful outcomes and earlier termination are, in my judgment, clearly ones which go to the appropriateness of the price payable under the contract and so are capable of being excluded from the assessment of fairness. Furthermore, they are referred to in the explainer script where the claimant's attention is drawn to the relevant documents whilst on the phone. That satisfies the need for prominence. The relevant passages, which I have quoted in this judgment, are in my view, clearly in plain and intelligible language. That view is strengthened by the ready understanding of them by some of the claimants who were quizzed about them in the witness box. If they can be read easily and accurately in that stressful environment, it seems plain to me that the objective average consumer test is satisfied.
  180. Consequently, in my judgment the terms were provided in a clear and prominent manner and so the test for fairness in section 62 does not apply.
  181. Preliminary issue 8

  182. Is the level of the success fee reasonable absent any informed consent?
  183. The claimants' revised point of dispute begins by relying upon preliminary point 4 in respect of an alleged lack of the necessary information and/or any clear explanation of it "both in terms of the percentage and manner of calculation." The relegation of preliminary point 4 to something of a card marking exercise for the line by line assessment makes reliance upon it in respect of this point of dispute to be a little problematic. It is not assisted by the quotations in preliminary point 4 appearing to have little to do with either the percentage or manner of calculation. At most, the reference is simply to the alleged ambiguity and lack of clarity in the documents. Nevertheless, there is a consistent theme within this point that the absence of any explanation of why the success fee in each case was set at the level it was, means that there cannot be any informed consent. On that basis, each success fee falls to be assessed as to its reasonableness.
  184. Separately, the revised point of dispute contends for the basic charges on which the success fee is calculated to be those that are recoverable rather than simply calculated by multiplying the hourly rate and time spent. Where fixed recoverable costs apply, they would be the recoverable sums. It is also suggested that any clause which did not rely on recoverable base costs being used would be non-compliant with the SRA Code or section 62 CRA 2015.
  185. Decision

  186. Before dealing with the issue of informed consent, I can simply say that I do not accept the claimants' arguments in the revised points of dispute regarding the limitation of the base costs to those which are recoverable and nor to the alleged non-compliance with secondary legislation. The contractual documentation makes it entirely clear that the base costs are to be calculated by multiplying the hourly rates by the time spent. The suggestion that only recoverable base costs should be used seems to rest upon a quotation taken from Nizami v Butt [2006] EWHC 159 (QB) regarding fairness which holds little weight in this context. References to the 10% Simmons v Castle ([2012] EWCA Civ 1039) uplift and comments regarding the level of success fees generally in District Judge Lumb's decision of A and M v Royal Mail Ltd (No. 1) [2015] 8 WLUK 182 provide no basis to set aside the contractual documentation in this respect.
  187. I now turn to the question of informed consent or, in other words, was a full and fair exposition of the facts given to the claimants in order to justify the success fee claimed? In the CFA under the heading "Success Fee", the following description is given:
  188. "The success fee can be as high as 100% of our basic charges but will not exceed 25% of any damages you receive… 10% of the success fee relates to the postponement of paying our fees and expenses. The success fee inclusive of the postponement element cannot be more than 100% of the total of the basic charges.
    Full details of the success fee we have set in your case are laid out in the 'what you need to know about a CFA' document."
  189. The details in the "What You Need To Know About A CFA" document are as follows:
  190. "The success fee is set out below and reflects the risks associated with your case. These risks include the following:
    (i) We have yet to obtain any formal witness evidence
    (ii) There are inherent risks to any litigation the extent of which are unknown in this case at the present time
    (iii) The future risk of failing to beat a Part 36 offer made by your opponent
    (iv) The fact that if we lose we will not earn anything
    (v) The arrangements we have made in respect of disbursements
    (vi) In public liability cases the Defendant is likely to hold any documents or records relating to maintenance, cleaning or inspection. Any of these may be subject to statutory defences.
    (vii) In claims arising from your employment the Defendant is likely to hold records of training or safety procedures.
    (viii) If your pre-existing insurer grants indemnity the fact that our basic charges will be reduced if you lose and there will be irrecoverable items of expenditure from them or your opponent.
    Our success fee is as follows:
    100% of our basic charges in the event that your claim proceeds to a court hearing to determine any of the following: Liability, Causation or Quantum (the level of damages).
    Otherwise it is as follows:
    25% of our basic charges if your claim arises from a road traffic accident and is valued at less than £500,000.
    35% if your claim arises from your employer's negligence (except claims involving exposure to asbestos, claims relating to psychiatric injury claims relating to repetitive strain injury except upper limb disorders caused by vibration).
    27.5% if your claim arises from a disease caused by your employer's negligent exposure to asbestos, psychiatric injury caused by work-related psychological stress and excluding work related upper limb disorder other than those disorders caused by vibration.
    100% in all other cases."
  191. There is nothing in the oral explanation regarding the level of the success fee, just as there is no explanation of the distinction between the success fee as a percentage of the base costs and the overall percentage cap based on the level of damages. Although the explanation of the success fee above is careful to refer to the risks involved in different types of cases, the risk factors have clearly been drafted in a broad fashion even where some factors only relate to specific types of personal injury cases. For example, the pre-existing insurer referred to at (viii) presumably only relates to road traffic accidents since employees and members of the public who are unfortunate enough to have accidents at work or in public places respectively are unlikely to have pre-existing insurance, let alone one providing an indemnity regarding claims against that employee / member of the public.
  192. At best, the defendant has determined upon different levels of success fee for different types of cases and produced a generic risk assessment which seeks to justify those figures. In this way, there is a clear distinction between the non- risk based approach in Herbert but it does not seek to distinguish, for example, in road traffic accident between a passenger who is a claimant and a driver where the risk profile may be very different.
  193. As can be seen from the quotation from the CFA itself, the defendant also seeks to justify 10% of the success fee by reference to postponement of the paying of fees and expenses. Whilst that option has been available to solicitors from the beginning of the use of CFAs in civil litigation, it is a relatively unusual approach, not least because it seemed to trip up solicitors regularly in claiming more than 100% as a success fee when the postponement percentage was added to the risk percentage. In my view, it is something that is sufficiently unusual to have merited a mention to the client in a full and fair exposition of the success fee being claimed. It is also at a sufficiently high level compared with the few others that I have seen to be unusual in amount, particularly given the nature of these cases is such that they were unlikely to have taken a long time to resolve and therefore the funding cost would be limited.
  194. I am therefore firmly of the view that the presumption regarding the claimants' agreement to the level of success fee is rebutted and that as such they should be considered as to their reasonableness.
  195. In the 10 test cases, there are seven which involve road traffic accidents and three which concern accidents at work. According to Mr Marven's skeleton argument, six of the cases settled pre-proceedings, Ms Webber's case settled after proceedings and three reached a hearing. From reading the breakdown of costs in those last three cases, it seems to me that only Mr Berry's case is treated as having reached the hearing and as such are 100% success fee is payable. Mr Hopkins' case seemed to settle short of a hearing and Mr Moult's case did reach a hearing but he failed to beat the opponent's Part 36 offer and it may be for that reason that a reduced success fee has been claimed. I raise this simply to explain why I have only treated Mr Berry as being liable for a 100% success fee rather than the others.
  196. It has always been the case that a costs judge assessing the success fee needs to put themselves into the position of the solicitor when entering into the CFA. Hindsight in the form of seeing how the case turned out is not relevant. Here, I have been able to consider the documents filed in the bundle for each case at the time the onboarding process took place.
  197. There are five cases in which the claimant was the driver of a motor vehicle. In three of those cases (Hopkins, Khan and Gwilliams) the vehicle in which they were travelling was hit from the side in the manner of the seminal case of Callery v Gray [2001] EWCA Civ 1117. In one case (Rabinovitch) there was a classic rear end shunt. The only case (Bikar) in which liability for the accident seemed less clear cut involved a rather more high velocity impact on the motorway. However, prospects were undoubtedly improved in that case by the other driver admitting fault at the scene of the accident.
  198. In two cases (Moult and Webber) the claimants were passengers in the car in which they were travelling. It is trite to say there are almost no risks in such claims, at least in terms of liability.
  199. In Callery the Court of Appeal said that no case was without risk and awarded a 20% success fee. In Halloran v Delaney [2002) EWCA Civ 1258 Brooke LJ, who had been one of the Court of Appeal in Callery, took the view that there was subsequently less uncertainty about a suitable success fee and reduced the figure to 5% for straightforward accidents. A year later, in the Claims Direct Test Cases [2003) EWCA Civ 136 Brooke LJ returned to the subject at the end of the judgment and said the following at paragraphs 100 and 101:
  200. "Halloran v Delaney…was not such an occasion. It was concerned with an extremely simple road traffic accident claim which was swiftly settled for £1500 with a minimum of fuss and bother. In paragraph 32 of my judgment I referred to the court's description of Callery v Gray as a "modest and straightforward claim for compensation for personal injuries resulting from a road traffic accident…where there was no special feature that raised apprehension that the claim might not prove to be sound". In paragraphs 34 to 36 I suggested the approach that judges should adopt in future when appraising the appropriateness of the success fee "in claims as simple as this".
    Subsequent events have shown that I should have expressed myself with greater clarity. The type of case to which I was referring was a case similar to Callery v Gray and Halloran v Delaney in which, to adopt the "ready reckoner" in Cook on Costs 2003, at page 545, the prospects of success are virtually 100%. The two-step fee advocated by the court in Callery v Gray (No. 1) is apt to allow a solicitor in such a case to cater for the wholly unexpected risk lurking below the limpid waters of the simplest of claims. It did not require any research evidence or submissions from other parties in the industry to persuade the court that in this type of extremely simple claim a success fee of over 5% was no longer tenable in all the circumstances."
  201. Two-stage success fees are claimed by the defendant according to the description set out in the what you need to know document. Consequently there is a 100% success fee for a case which reaches a hearing and, as such, has manifested an unexpected risk, to quote Brooke LJ. The existence of this backstop has to be taken into account when considering the reasonableness of the first stage.
  202. In my view, it is difficult to see why the passenger claims should attract a success fee of any more than the 5% envisaged in Halloran since they are the very simplest of claims. However, the claimants have contended for a reduction to 10% and so that is what I allow as reasonable. The driver claims are, as I have mentioned, very similar to the circumstances in Callery itself, or are of similar simplicity. I think that a reasonable success fee in respect of those cases would be higher than the passenger claims and I allow the claimants' offer of 15% which, in round terms, equates to a 6 in 7 (87%) prospects of success using the ready reckoner and which I consider to be reasonable. (The defendant's figure of 25% would be a 4 in 5 (or 80%) prospect by comparison.)
  203. The accident at work claims involve one claimant standing on collapsing scaffolding (Berry), one slipping on ice in a freezer when moving goods in a warehouse (Ali-Hasan) and one where a work colleague started to move a forklift truck whilst the claimant was straightening a piece of racking upon it (Claridge).
  204. Mr Berry's case reached a hearing and as such the 100% success fee was contractually justified. In my view, it is also justified on a reasonableness basis given that that second stage only occurred if the hearing actually took place. Until that point, a 35% success fee applied. I have to say that I am not convinced that 35% reflected the risks to the claimant in this particular case if it had settled earlier but I am firmly of the view that a 100% success fee is justified for a case which reached the hearing. I do not subscribe to the view that it only applies where liability (or possibly causation) was in issue and which meant that the claimant might receive nothing.
  205. In relation to the other two claims, I consider that the 35% success fee is a reasonable one. Some solicitors might have considered the risks to be less than the 74% (3 in 4) prospect of success a 35% success fee denotes. But the extent of the soft tissue injuries suffered by Mr Claridge and the question of the availability of footwear et cetera for Mr Ali-Hasan are just examples of the case specific factors apparent from the information available to the solicitors which in my view make the admittedly standard success fee a reasonable one in these particular cases.
  206. Preliminary issue 9

  207. Are the hourly rates claimed unusual and if so, was it explained to the claimants that they may not be recovered from the opponents as a consequence?
  208. In the What You Need To Know About A CFA document, directly before the text regarding success fees is the following paragraph under the heading "Basic Charges":
  209. "These are for work done under this agreement and are subject to regular review. We calculate our charges for each hour engaged on your matter. Routine telephone calls will be charged as units of 1/10th of an hour. Other letters will be charged on a time basis. The hourly rate is £217.00 and is reviewed each January. We will notify you in writing of any change to the rate."
  210. I note, in passing, that there appears to be a missing sentence in this paragraph since there is no mention of routine letters and yet "other" letters are referred to on a timed basis. However, nothing appears to turn on this as the complaint made about its contents relates to the fact that all fee earners are charged at £217 per hour regardless of their status.
  211. This approach is said to be unusual and as such the claimants should not be bound by their agreement to the contractual terms. Since many of the fee earners are not qualified solicitors they should be considered as "Grade D" for the purposes of the Guideline Hourly Rates ("GHR") and as such should be allowed £111 per hour (or £126 per hour for later work post the implementation of the 2021 GHR (rather than the 2010 GHR)).
  212. The defendant's reply is that the figures are clearly set out in the retainer and they are not unusual and as such the claimant is bound by them, subject to the overall cap. In any event, there is no basis for reducing the rates to the GHR as they are guidelines only and intended for between the parties' assessments, not for solicitor client assessments.
  213. These brief points of dispute and replies were amplified by submissions. Mr Mallalieu invited me to look at the breakdowns provided in respect of each case and to consider that the work was largely done by the junior fee earners. That was not surprising in respect of the nature of this work, but it highlighted the need to charge it at an appropriate rate. £217 per hour was an unreasonable rate and there was no oral explanation of that rate or the manner in which it was applied to all fee earners. There was no explanation that this approach would be likely to lead to an inability to achieve a recovery of costs. There was no informed consent and therefore the hourly rates fall to be assessed.
  214. Mr Marven described the £217 per hour figure as a fairly typical rate and reiterated the reply that the GHR are not helpful between solicitor and client assessments rather than between the parties. He did not consider them to be either unusual in nature or an unusual amount.
  215. Decision

  216. The figure of £217 per hour seems, in all probability, to have been taken from the 2010 GHR for National Band 1. There, it relates to the Grade A fee earners i.e. those with more than eight years' post qualification experience. The remaining rates for National Band 1 are £192, £161 and £118 respectively. The figure of £111 per hour contended for by the claimants represents the Grade D rate for trainee solicitors and unqualified practitioners in National Band 2. It is not obvious to me as to why the lower Band has been chosen by the claimants for this Grade. The logic of any argument preferring Band 2 to Band 1 would lead to the £217 per hour figure also being challenged since the rate for a Grade A in Band 2 would be £201 per hour.
  217. Mr Marven's argument that the GHR are irrelevant to solicitor and client assessments seems to me to be weakened by the defendant seemingly claiming a rate from the GHR. Furthermore, there has to be some consideration of the between the party rates in order to make sense of the question of whether or not they are likely to be recovered from the opponent if they are considered to be unusual.
  218. In any event, I have no doubt that to charge the same rate for all work done by all fee earners is unusual in itself. A "blended rate" is sometimes employed where a range of fee earners are used but it is not common in my experience and I would expect there to be some explanation of this approach to the client. It would also require an appreciable amount of higher grade fee earner work to complement the lower grade fee earners charging an enhanced rate. In such circumstances, a blended rate agreed with the client would be perfectly acceptable. However here, given the nature of the cases being dealt with, and in the absence of any explanation for its imposition, it has the appearance of being simply an attempt to charge lower grade fee earners at a higher rate.
  219. In cases where a successful recovery based on hourly rates could be expected from the opponent, it seems to me inevitable that the charging structure would be successfully challenged by the opponent. Even the most recent GHR for Grade D fee earners dealing with the heaviest commercial work would not attract a rate of £217 per hour. Obviously there is an issue as to whether the GHR would need to be followed in any event, but it is an indication that modest value personal injury cases from several years ago are extremely unlikely to be able to justify the hourly rates that are claimed on a between the parties' assessment.
  220. It is said that the GHR are for simple fast-track cases or applications lasting less than a day and as such are very often exceeded by the cases coming before the court. For once however, it seems to me that the GHR are exactly the sort of rates that ought to be allowed, whether or not costs are being sought from the opponent or from the client. Consequently, with the limited variation of the rates to be used being National Band 1, rather than National Band 2, I allow those rates for the breakdowns that have been produced.

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