What price risk?

Mark Balme – Advocate

Mark Balme, Advocate provides a warning in relation to risk assessments and mischarging.

I speculate that many solicitors who incepted Conditional Fee Agreements after 1st April 2013, provided for a success fee of 100% capped at 25% of damages, prescribed by 5 (2) of The Conditional Fee Agreements Order 2013. It is after all, often easier to go with the crowd, when confronted with something new, thinking that they can’t all be wrong, so therefore what we are doing must be right.

Well guess what, that’s not a great approach and we are starting to see what should have been simple solicitor and client arrangements, starting to unravel in the Courts, resulting in disruption and loss to Solicitors

This is something which appears to have the potential to become quite widespread (if left unchecked) whereas comparatively, in years past, there were not many solicitor and client costs disputes, and those that there were, often had deeper underlying reasons, and involved substantial sums of money – but not now.

Damages, especially modest amounts are often “spent” before the client gets the cheque, and therefore any deduction becomes even more unpalatable.

CPR 46.9 should be considered by Practitioners, noting (4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.

See also Herbert v HH Law Ltd QB Division, Sheffield District Registry, 21/03/18

“When the costs judge is faced with the client’s application under 46.9(4) for a reduction of the percentage increase, I can see no good reason for the risk in the individual case to be excluded as a relevant factor. On the contrary it is likely to be the primary factor. This reflects the fact that the assessment is concerned with the circumstances of the particular retainer. By that retainer, and the fiduciary obligations to which it gives rise, the exclusive focus of the solicitor is on the best interests of the client: see also the SRA Code of Conduct 2011, Introduction and Outcome 1.6\”

In a different context, but still worthwhile reading is Surrey v Barnet and Chase Farms Hospitals NHS Trust (2018) EWCA Civ 451 – Solicitors owe a fiduciary duty to the client whose interests must always prevail. The ever astute DJ Besford was right to observe that:

‘Where one of two or more options available to a client is more financially beneficial to the solicitor, the need for transparency becomes ever greater’.

So, if your Conditional Fee Agreements are of the sort described, then it would be prudent to re-visit the basis of the 100% success fee or at least make a point of not forgetting to do that when the claim is finished, otherwise for all new matters, risk assess objectively.

READY RECKONER

Prospects of       %

“Success”                            Increase

100%                     0%

95%                        5%

90%                        11%

80%                        25%

75%                        33%

70%                        43%

67%                        50%

60%                        67%

55%                        82%

50%                        100%

 

If you have any queries relating to this article or if you would like to arrange training at your firm please contact Mark

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