A law firm has been awarded more than £85,000 in damages after claiming another firm breached a referral agreement involving over 700 payment protection insurance (PPI) claims.
Audley Clarke Solicitors, of Sale, Cheshire, transferred its portfolio of PPI claims to Manchester-based MDMKJB Limited in return for a fee upon the successful conclusion of each claim. MDMKJB denied liability.
Some 707 claims were transferred to the defendant.
His Honour Judge Malek, sitting in the county court at Manchester, said MDMKJB was expected to ‘contact each client, secure retainer agreements, and progress the claims’. The agreement was ‘detailed and comprehensive’.
The defendant ‘knew or should have known’ when entering the agreement that the ‘cases were of low value, would require work and that some would require the payment of disbursements by the defendant, that some would need to be issued at court and would generally be allocated to the small claims track, and that these latter cases would, given the limited costs recoverable by legal representatives, likely be unprofitable’.
The judgment in Audley Clarke Solicitors v MDMKJB added: ‘In simple terms, the defendant assumed the commercial risk of both the agreement and the running of these unprofitable cases – no doubt in the hope (nay expectation) that any unprofitable cases would be sufficiently small in number so as to render the overall "deal" profitable. Alas that was not to be.
‘However, this does not mean that the defendant is not bound by the bargain (bad as it now would appear to be for the defendant) that it voluntarily struck.’
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Finding in favour of Audley Clarke, the judge said the defendant's obligation to pay fees was ‘clearly set out’. The defendant made ‘little or no attempt’ to contact referred clients and ‘acted in breach of the agreement resulting in loss to the claimant’.
Audley Clarke was therefore entitled to £19,443.48 as claimed and invoiced in relation to the 102 settled claims and disbursement.
In damages, the firm is entitled to £86,520.19, comprising £21,384.25 in relation to 85 issued but not retained cases, and £64,135.94 in relation to 495 non-issued and non-litigated cases.
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