The vexed issue of whether conditional fee agreements can be validly assigned from one law firm to another is to be dealt with by the Court of Appeal, it has been confirmed.
An application by the defendants to have the appeal in Budana v Leeds Teaching Hospitals NHS Trust leapfrogged to the Court of Appeal has been granted, although no date has yet been set for the hearing.
In Budana, heard in Kingston upon Hull County Court in February, DJ Besford held that a pre-Jackson retainer transferred from Baker Rees to Neil Hudgell had been ‘terminated’ when Baker Rees wrote to the client saying that it would no longer perform personal injury work.
This meant that there was no ‘valid’ retainer to be assigned. However, DJ Besford rejected arguments that the CFA could not have been assigned in any event, considering himself bound by the reasoning adopted in the earlier High Court decision of Jenkins v Young Bros Transport (2006) 1 WLR 3189.
Despite noting that ‘the facts in Jenkins are far removed from the commercial wholesale disposal of clients as in this case’, Besford said that the higher authority ‘clearly permits the transfer of a CFA between firms’, and must be followed.
A second case, Jones v Spire Healthcare, dealt with a similar issue in May – when Judge Graham Wood in Liverpool County Court overturned an earlier ruling that a CFA transferred from Barnetts to SGI Legal had not been validly assigned.
Again, the judge held that he was bound by Jenkins.
The Budana case will be the first time that the question of whether CFAs can be assigned from one firm to another will be dealt with by the Court of Appeal, which will not be bound by the High Court’s reasoning in Jenkins. Many commentators assert that Jenkins was wrongly decided.
The appeal court’s decision will have significant ramifications for the personal injury sector, where tens of thousands of pre-Jackson cases – which benefit from recoverable success fees and after-the-event insurance premiums – have been sold on to larger practices as the PI sector consolidates.
Roger Mallalieu, defendant counsel in the Budana case, told the Gazette that he hoped the Court of Appeal would ‘bring some much-needed resolution to the uncertainties in this area’.