Lawyers have won their appeal in a court ruling that will come as a massive relief across the personal injury market.
Judges in the Court of Appeal ruled in Belsner v CAM Legal Services this morning that the firm’s personal injury client had made fair and reasonable deductions from her damages. The deductions were therefore lawful and did not need to be paid back.
But the ruling also stated that the solicitors may not have complied with the SRA code of conduct in that 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'.
The costs claim had the potential to impact upon thousands of similar low-value RTA claims conducted over the past nine years where firms have used similar client care letters and made similar costs arrangements.
In a 23-page judgment handed down by the master of the rolls Sir Geoffrey Vos and endorsed by both the chancellor of the High Court, Sir Julian Flaux and Lord Justice Nugee, the court not only found in favour of the solicitors on every single legal point taken against it by its former client, Darya Belsner, and her legal representatives, checkmylegalfees.com, but also criticised the cost recovery firm’s business model.
But the judgment also criticised elements of how PI clients are treated in the claims process and called the current process 'unsatisfactory in a number of respects'.
Vos said: 'In RTA claims pursued through the RTA portal (and perhaps the whiplash portal), solicitors seem to be signing up their clients to a costs regime that allows them to charge significantly more than the claim is known in advance to be likely to be worth.
'The unsatisfactory nature of these arrangements is not appropriately alleviated by solicitors deciding, at their own discretion, to charge their clients whatever lesser (and more reasonable) sum they may choose with the benefit of hindsight.'
The client had sustained minor injuries following a motorcycle accident in 2016 and instructed the Norfolk firm to act for her.
The CFA made clear that if the client won her claim, she would ‘pay our basic charges, our expenses and disbursements and a success fee together with the premium for any insurance you take out’. In the event, she secured damages of £1,916.98 after liability was admitted and the solicitors deducted £385.50 from the sum paid to her.
On appeal, Mr Justice Lavender in the High Court upheld an appeal from the client and ordered the solicitor repay £295.50 (being the success fee allowed by the district judge less the £75 plus VAT success fee permitted by the judge). Crucially, the judge said that the relationship between solicitor and client was a fiduciary one, and as such a solicitor could not receive a profit from his client without their fully informed consent.
Vos said the question at the heart of the second appeal was whether Lavender J was right to assume that section 74(3) and CPR Part 46.9(2) applied to cases brought through the RTA portal, where no county court proceedings were actually issued. That question turned on whether the claims made within the pre-action portals were properly to be regarded as 'non-contentious business' (as the solicitors contended), or as 'contentious business' (as the client contended).
The court ruled that section 74(3) and Part 46.9(2) did not apply at all to claims brought through the RTA portal without county court proceedings actually being issued, and that the judge was wrong to say that the solicitors owed the client fiduciary duties in the negotiation of their retainer.
Vos said the distinction between contentious and non-contentious costs was 'outdated and illogical' and in urgent need of legislative attention.
It was also 'unsatisfactory' that firms like checkmylegalfees.com could adopt a business model that allows them to bring expensive High Court litigation to assess modest solicitors’ bills in cases of this kind.
He added: 'The Legal Ombudsman scheme would be a cheaper and more effective method of querying solicitors’ bills in these circumstances, but the whole court process of assessment of solicitors’ bills in contentious and non contentious business requires careful review and significant reform.'
Responding to the judgment, Darren Draper, practice manager at CAM Legal Services, said: 'Naturally, we are very pleased that the Court of Appeal found that we did not overcharge Ms Belsner but also that our charges were found to be both fair and reasonable.
'In recent years the claimant personal injury sector has been under tremendous pressure following major reforms that have led to significant reductions in the amount of costs recoverable between the parties. We expect this result will now bring some much-needed comfort and certainty to the legal profession.'
Breaking my usual rule on legal self-tweeting, the appeal in Belsner has been allowed, and on terms that may make it much harder for claims organisations to turn a profit from shaking-down solicitors. Link to judgment to follow.— Ben Williams (@FaringForwards) October 27, 2022
The more I absorb the Belsner judgment, the more apparent it is that it is a big victory for access to justice - more to follow - https://t.co/TDkpmGBo8k— Kerry Underwood (@kerry_underwood) October 27, 2022
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