Costs judge invites case against firm over ‘secret’ commission payments

The High Court has ruled out forcing national firm Slater and Gordon to answer questions about so-called ‘secret’ profits received as commissions from after-the-event insurance premiums.

But the issue – potentially affecting thousands of former personal injury clients – is unlikely to end there, with Costs Judge Rowley suggesting there is enough evidence for the claimants to seek a remedy against the national firm.

In Raubenheimer v Slater & Gordon UK Limited, the claimant served a Part 18 request under the Solicitors Act seeking information on his £254 ATE insurance policy, intermediaries and direct payments to Slater and Gordon. Wayne Raubenheimer’s is one of a group of 140 cases represented by costs recovery firm checkmylegalfees.com, with 10 test cases currently proceeding in the Senior Courts Costs Office.

In his ruling, Rowley said there was ‘simply no room’ for the court in a Solicitors Act assessment to consider the composition of an insurance premium. He accepted it would be less convenient to address the issues around ATE premiums in another set of proceedings, but that did not justify departing from regular procedure.

But looking at wider issues, the judge said the claimant appeared to have ‘sufficient evidence’ with which to bring separate proceedings and which would require Slater and Gordon to set out its case why the claim was wrong.

He added: ‘Having not answered the question in these proceedings, it is difficult to see that a claimant would be criticised for bringing other proceedings even if there is a cast-iron answer to the claimant’s challenge. As such, the claimant might be proceeding in a costs free environment at least until the defendant had placed its cards on the table.’

In support of the Part 18 application, the claimant’s representative Mark Carlisle produced correspondence between himself and the administrators of the ATE insurers Elite. It is the claimant’s case that payments appear to have been made by Elite to Slater and Gordon but that these payments were not disclosed to the client. The claimant says that the firm appears to have,breached its fiduciary duty not to make a ‘secret profit’ from its role.

Slater and Gordon submitted that the claimant was wrong to draw inferences in respect of communications between Carlisle and the Elite administrators.

The claims are part of a wider campaign, led by a handful of firms, to challenge costs deducted from successful PL claimants. There have been a number of judgments deciding on issues about what costs were reasonable and whether former clients can have access to documents held by their lawyers.

Click below to read the judgment.