Legal advice and funding – Breach – Conditional fee agreements – Reasons
Carlo Moise Silvera v (1) Bray Walker Solicitors (a firm) (2) Bevans Bray Walker Ltd (T/A Bevans): CA (Civ Div) (Lords Justice Pill, Wilson, Richards): 29 March 2010
The appellant (S), who had entered into conditional fee agreements with the respondent solicitors (B), appealed against a decision ( EWHC 3147 (QB),  106(3) LSG 16), that B had not breached the requirement in regulation 3(1)(a) of the Conditional Fee Agreements Regulations 2000 to specify briefly the reasons for setting the success fee at the level stated in the agreements.
B had acted for S in respect of two claims. They considered that one claim, which was the smaller of the two, had a significantly greater chance of success than the other. In the agreements, the success fee was set at 75% of B’s basic charges. The judge found that B had orally explained the terms of the agreements before they were entered into; they had explained that 70% of the success fee was referable to the risk that they would be paid nothing and that 5% was referable to the delay in payment of the basic charges, even in the event of success; they had also given a brief oral explanation of the 70% figure, stating that the normal range in such a case was between 50% and 100%, and that S’s was a complicated case with risk factors. B used the Law Society’s model conditional fee agreement, which stated that the percentage chosen reflected certain factors. One factor was ‘the fact that if you lose, we will not earn anything’. Another was ‘our assessment of the risks of your case’. Provision was made in the model form to set out those risks or some of them, but B failed to do that. B were not seeking to recover any part of their success fee. The issues were: (i) whether the references in the agreements to ‘the fact that if you lose, we will not earn anything’ and to ‘our assessment of the risks of your case’ represented a literal compliance with regulation 3(1)(a); (ii) whether, even if there was a literal breach of regulation 3(1)(a), there was no relevant breach because it was immaterial.
Held: (1) By the narrowest margin, the judge had been correct to hold that there had been literal compliance with regulation 3(1)(a). Regard could be had to the background. Explanations had been given by B before the agreements were concluded. S was an experienced businessman and had had the assistance of a shrewd and intelligent lawyer when matters were explained. There was no evidence that he failed to understand any aspect of the agreements or that he put to B any question which failed to elicit an answer which he considered to be satisfactory. There was sufficient flexibility within the word ‘briefly’ in regulation 3(1)(a) to allow those background features to render the requisite specification extremely brief. On that basis, the printed words of the Law Society’s model agreement, however general, were the reasons for setting the percentage increase and did pass muster.
(2) Even if there had been a literal breach of regulation 3(1)(a), it did not qualify as a breach for the purpose of rendering the agreements unenforceable, because, in the events which had happened and in the context of the instant claim, it was entirely immaterial, Hollins v Russell  EWCA Civ 718,  1 WLR 2487 applied.
Jeremy Morgan QC (instructed by Jeffrey Green Russell) for the appellant; Nicholas Bacon (instructed by Bevans Bray Walker Ltd) for the respondents.