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The issue of the lien

The issue of the lien may vary depending on where in the food chain you lie.

Let’s perhaps begin with the sorry story of Khans Solicitors v Chifuntwe and Secretary of State for the Home Department [2013] EWCA Civ 481. (Khans Solicitor (A Firm) v Chifuntwe & Anor [2013] EWCA Civ 481 (08 May 2013) (bailii.org) Perhaps in the end not so sorry for Khans but certainly for Teresa May (who?)

The leading judgment of Sir Stephen Sedley was the first authoritative decision of the Court of Appeal for over 100 years on the solicitor’s lien for his costs, reviewing as it did authorities going as far back as 1779.

The decision has relevance from either a paying or receiving party’s point of view. In short, the SSHD being responsible for Mr Chifuntwe’s costs of judicial review proceedings, during costs negotiations after the substantive case, Mr Chifuntwe purported to sack his solicitors, Khans, and then agreed costs with the Costs Draftsman.  Despite Khans’ slow efforts to prevent payment to their former client, SSHD on the advice of her Costs Draftsman sent the monies to Mr Chifuntwe.

Cue court action by Khans. They were successful in establishing in that long line of authority that SSHD had actual notice of their lien and should never have paid the by then absconding Mr Chifuntwe. Order: SSHD must pay again, but to Khans this time.

This decision has been reinforced in a slightly different way in Gavin Edmondson Solicitors Limited (Respondent/Cross-Appellant) v Haven Insurance Company Limited (Appellant/Cross-Respondent) (supremecourt.uk) [2018] UKSC 21. Here Haven tried to in effect sidestep any involvement by Gavin Edmondson by seeking to settle direct with the Claimants even though they knew of the Solicitors’ involvement, by virtue of the case being logged on the RTA Portal. The outcome was in effect the same, the protection of the acting Solicitor’s right to costs.

Tips:

1. As a paying party always be aware of being on notice, however vague, of a claim for costs. Say a Claimant decides to act in person, but you can plainly see the claim form was issued by Solicitors, that is notice of a likely liability for costs.
2. The same applies where two or more firms have acted
3. As a receiving party, if your file is transferred on, always get an undertaking to preserve your lien. This will give you a right of action should things go awry later
4. Similarly, if you are the substitute you need to remember that the costs of the matter are the Claimant’s costs in the end. So whilst liaising with your predecessor might be required, the settlement is always the client’s decision.
5. But, if you have given an undertaking, you cannot just pay the Client unless they provide proof they have fully satisfied the previous Solicitor’s fees. That’s unlikely in a CFA case for example.

This is an attempt to distil over 240 years of jurisprudence into 1 small article. We are always here at PIC to provide any bespoke advice on your particular query or circumstances