Ian’s Top 10 Tips – No.8: Previous Solicitors
Ian’s Top Ten Tips – No.8: Previous Solicitors
Should you really be taking on a claim where there have been previous Solicitors? The ideal scenario for personal injury and clinical negligence Solicitors is that your own marketing activities bring in new clients whose potential claims having everything going for them. And in this new era, with limited recoverable costs, it pays to be choosey when agreeing to take on any new case.
Here, PIC Costs Lawyer Ian Moxon refers to the important points to consider.
Questions to ask before taking on any new claim in the new era
In this new era personal injury and clinical negligence Solicitors should ask two questions of equal importance before agreeing to take on a client’s case:
The first question to ask is; will liability be established? If the potential new client wants a CFAlite or similar retainer, and with recoverability of additional liabilities gone, you should look for good or excellent prospects of success on liability before agreeing to take the claim on under such a funding arrangement.
The second question to ask, which in this new era is of equal importance to the first question is, will I make any money out of this claim? The new test of proportionality and fixed costs mean that the recoverable costs in any claim will be limited. If it appears that the claim will require much work/ high expenditure compared to the likely recoverable damages you ought to reject the case (because under a CFAlite or similar retainer, where the client’s liability to pay Solicitor and own client costs is limited, you may end up working for free once the costs of the claim start to exceed the recoverable damages).
Now, if there are previous Solicitors involved, question two above carries major importance. What if the previous Solicitors have already spent the majority of the proportionate recoverable costs? In those circumstances you may prefer to reject the claim.
What is a lien?
A Solicitor has, at common law, a general lien to retain any money, papers or other property belonging to the client until payment of his outstanding costs. Now this is a complex area of law in itself and one which you should steer well clear of becoming embroiled in (because you won’t get paid for that). The basic principles, however, are straightforward.
Client ends retainer with previous Solicitors
Sometimes a client will wish to change to a different firm of Solicitors (perhaps having become dissatisfied with his current Solicitors), himself terminating the retainer. In such circumstances the previous Solicitors will usually be entitled to seek payment of their costs from the client before agreeing to release his file of papers. In a personal injury or clinical negligence claim the client is unlikely to be able to pay his Solicitor’s bill until the conclusion of his claim. In such circumstances it is traditional practice for the new Solicitors to undertake to preserve the previous Solicitor’s lien (and the particular terms of that Undertaking, in this new are, are important).
Previous Solicitors end retainer with client
The situation is slightly different where the Solicitor ends the retainer (perhaps a conflict of interests arose meaning that the client had to be advised to seek alternative Solicitors). In those circumstances the lien is relieved on receipt of Undertakings from the new Solicitors. In other words the previous Solicitor’s papers are handed over, subject to a lien being preserved by an Undertaking.
Client wishes to change Solicitor:
Leo Abse and Cohen v Evan G Jones Builders Ltd 1984 WL 282817
Solicitor ends retainer:
Gamlen Chemical Ltd (1980) 1 WLR 614
To avoid issues down the line, I recommend that the usual practice of writing a brief letter to the previous Solicitors “undertaking to preserve their lien on costs” is not followed. From a typical personal injury/ clinical negligence perspective you might wish to make the following issues clear at the outset:
- At the time of handing over the papers the previous Solicitors must provide documentation confirming the presence of an enforceable retainer, or they must confirm they have no lien to be preserved. This is an important clause and has been the cause of many arguments between new and previous Solicitors.
- The previous Solicitors will hand over their full files of papers (not just a badly copied selection).
- The new Solicitors with serve at the correct times all required papers, Notices and Bills to ensure maximum recovery of the previous Solicitor’s costs (e.g. such as Notices of Funding regarding the previous Solicitor’s Conditional Fee Agreement). The new Solicitors should undertake to make up the difference in unrecoverable costs if their failure to take steps results in costs not being recoverable at the end of the successful claim.
- Any costs recovered at the end of the claim will be shared pro-rata, unless some specific apportionment takes place.
- Confirm arrangements for preparation of the final Bill of Costs and payment of Costs Draftsmen’s fees.
If the previous Solicitors had entered into a Conditional Fee Agreement with the client alarm bells should be ringing in the new Solicitor’s ears. Mistakes here can cause considerable sums of money to be lost and, indeed, have caused entire firms of Solicitors to go bust. See Davies v Jones (2009) EWCA Civ 1164. If the client had a Conditional Fee Agreement before, he will want one now. If the client moved firms to stay with a particular conducting Solicitor it might be possible to novate the Conditional Fee Agreement, but there will be also considerations in relation to assignment and QUOCS (the client must receive proper advice at this stage). The funding contract between the new Solicitors and client needs very careful consideration indeed and this is the time to consider taking advice from specialist Costs Counsel. Do not agree to anything or do any substantive work whatsoever until issues about the funding contract have been resolved. Make it clear to the previous Solicitors and the client that your firm are not acting or retained until those issues have been resolved.
Reasons why there might be previous Solicitors
There are only a handful of reasons why there might be previous Solicitors:
- The previous Solicitors might have encountered a conflict of interests. You should consider taking on such cases but with cautious optimism.
- The previous Solicitors closed their file due to lack of prospects of success. Agree to have a look at the previous Solicitor’s file but confirm to the client and previous Solicitors you are not yet agreeing to act and no retainer has yet been entered into.
- The client might have left his previous Solicitors on grounds that he was dissatisfied with their work. Again, agree to have a look at the previous Solicitor’s file but confirm to the client and previous Solicitors you are not yet agreeing to act and no retainer has yet been entered into yet (you may need to go to the previous Solicitor’s offices to read their file in these circumstances).
The costs incurred in the transfer process will probably not be recoverable between the parties. Are you ok absorbing those costs?
It might be that the previous Solicitors didn’t do the best job or didn’t deal with the claim your way. Can you get the claim back on track without considerable additional expenditure of costs (as you probably won’t get paid for rectifying the problems created by the previous Solicitors or duplication of effort bringing matters into your own system of work)?
Is the claim subject to a costs management order? Has the Costs Budget already been exceeded/ how much is left under each phase of the Budget? Establish the costs budget position before agreeing to take over the claim.
See above – there are two important questions to ask when you take on any new case. Will liability be established and will I make any money out of this claim?
Why not consult PIC before taking on a file from previous Solicitors?
We have vast experience of dealing with files where there have been previous Solicitors. PIC can help you decide if potential new claims, such as those coming from previous Solicitors, will be profitable. PIC can also help with questions relating to funding arrangements and forms of Undertaking, and we can also recommend suitable Counsel who should be able to advice on technical issues.
If you would like any further advice you can contact Ian Moxon directly at firstname.lastname@example.org or on 01302 244415.