The Law Society of England and Wales has welcomed what it has described as a “landmark” judgment in the Court of Appeal in London.

The solicitors’ body said that the judgment provided “much-needed clarity” for solicitors and clients who entered into a type of ‘no-win-no-fee’ agreement.

The Court of Appeal yesterday (27 October) published its judgment in Belsner v CAM Legal Services, which examined solicitors’ costs, and the deductions from client damages in personal-injury cases.

The judges ruled that a solicitor firm that represented a client in a personal-injury case had made fair and reasonable deductions from her damages. The deductions were therefore lawful, and did not need to be paid back.

Low-value claims

The claim at the centre of the case was made through a pre-action portal set up to deal with small road-traffic accident claims.

According to the Law Society Gazette of England and Wales, it had the potential to affect thousands of similar low-value claims conducted over the past nine years, where firms had made similar costs arrangements.

The client in this case was represented in her appeal by a firm called Checkmylegalfees.com.

In his judgment, Sir Geoffrey Vos said that it was “unsatisfactory” that this firm could adopt a business model “that allows them to bring expensive High Court litigation to assess modest solicitors’ bills in cases of this kind”.

The judge said, however, that although the solicitors involved were not obliged to obtain the client’s informed consent to the terms of their conditional fee agreement (CFA), they did not comply with the profession’s code of conduct.

“They neither ensured that the client received the best possible information about the likely overall cost of the case, nor did they ensure that the client was in a position to make an informed decision about the case,” he said.

Solicitors ‘must be paid equitably’

Nick Emmerson ((Law Society of England and Wales Vice-President) said: “We welcome the judgment on this important case. As an intervening party, we understand a different outcome may have significantly impacted our members, and the ability of clients to secure the advice and representation they need.”

Emmerson said that it was “crucial” that solicitors be paid equitably for the work they did in personal-injury cases, adding that this judgment had upheld that point.

“Funding agreements between a solicitor and their client should be easy to understand and as transparent as possible.

“Looking forward, solicitors need to be able to continue to be paid fairly and reasonably for the work they carry out, while clients need an efficient mechanism that enables them to challenge the costs charged by their solicitor when there is a legitimate reason for doing so.”

Government urged to act

Emmerson said that much more needed to be done to ensure the statutory framework underpinning funding agreements and their assessment was fit for purpose.

Echoing a call for reform made by the judge, the vice-president said that one of the issues that needed further consideration was the distinction between ‘contentious’ and ‘non-contentious’ work.

The solicitors contended that this was ‘non-contentious’ business, as no court proceedings were involved, while the client argued that it was ‘contentious’.

The solicitors’ organisation urged the British government to reflect on this case, and ensure that the civil-justice system had “a solid foundation of clear legal-costs provisions” on which solicitors and their clients could rely.