CFA of claimant signed up in pre-LASPO rush ruled unenforceable

LASPO: no litigation services provided before 1 April

A law firm which was instructed in the run-up to LASPO coming into force failed to take any substantive steps in the case before 1 April 2013 and as a result their conditional fee agreement fell foul of the Act’s transitional provisions and was unenforceable, a district judge has ruled.

There are said to be many cases of a similar nature in the courts involving clients who were signed up in the rush before 1 April 2013.

According to a briefing by defendant firm DWF, in Choudhury (suing by his Litigation Friend) v Markerstudy Limited, the infant claimant was the passenger in a rear-end shunt on 12 March 2013 and his litigation friend accepted an offer of £1,150, which was approved at a hearing in January 2015.

The defendant requested a detailed assessment after not accepting the outcome of a provisional assessment.

The claimant sought to rely on a collective conditional fee agreement (CCFA) entered into between his law firm and the claimant’s insurer on 19 December 2011 and contended that the CCFA provided a valid pre-LASPO retainer which bound the litigation friend from a date prior to 1 April 2013. The claimant submitted that legal work had commenced before 1 April 2013.

The CCFA provided for a 12.5% success fee in the event that the case settled and a 100% success fee if the case was won after a trial.

The defendant did not dispute that if the litigation friend was bound by the terms of the CCFA prior to 1 April 2013 and advocacy or litigation services had been provided prior to that date that there would be a valid retainer in place.

The claimant maintained that his insurer had instructed the solicitors under the terms of his insurance policy that provided before-the-event insurance. However, the claim was actually brought by the claimant’s litigation friend, who was not insured under the policy.

The litigation friend did not become bound by the terms of the CCFA until she signed and returned the terms of business on 1 April 2013.

The defendant argued that the litigation friend had therefore actually entered into a post-LASPO, CFA and as such, the CFA was unenforceable as it did not provide for a 25% maximum limit of the success fee recoverable.

It also argued that the CCFA would be unenforceable in any event pursuant to the transitional provisions that required any success fee to be capped at 25% unless “advocacy or litigation services” were provided to the litigation friend before 1 April.

The bill of costs recorded just one undated routine telephone call to the claimant prior to 1 April 2013 and a routine letter about what would be involved in the claim. The defendant argued that the conversation probably related to funding matters and did not entail any advocacy or litigation services.

The claimant submitted that the pre-1 April telephone call and correspondence were items of work that fell within the definition of legal services pursuant to section 199 of the Court and Legal Services Act 1990.

District Judge Wildsmith, sitting in York, found that no litigation services were provided to the litigation friend or the claimant prior to 1 April. The telephone call was linked to the letter that outlined the nature of the funding arrangement, he said.

As the agreement was signed on 1 April 2013, it fell foul of LASPO and was unenforceable as between lawyer and client, and so no costs were payable due to the indemnity principle. So he assessed the claimant’s bill at nil and ordered costs of £3,000 in favour of the defendant.

Will Mackenzie, senior managing costs advisor at DWF, who represented the defendant, said: “Pre 1 April 2013, solicitors and counsel were all in a rush to enter into CFAs and CCFAs to ensure that a success fee was recoverable.

“According to the judgment of District Judge Wildsmith, unless substantive work was done to progress the claim, claimants and counsel are likely to be found to have fallen foul of the relevant regulations and lose entitlement to recover their entire claim for costs.”

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