Lawyers pursuing personal injury firms over damages deductions claim they have evidence of vastly over-inflated costs being charged. Analysis of retainers jointly undertaken by checkmylegalfees.com and JG Solicitors Ltd appears to suggest that some firms have charged as much as £540 an hour for work by Grade D fee earners.
The costs recovery outfits claim to have assessed 925 retainers from 249 firms from 2013 to 2021 to show how some practices were justifying deducting 25% from their clients’ damages. The results of this research form part of a witness statement presented to the Court of Appeal ahead of the Belsner v CAM Legal Services hearing, which arose from a detailed assessment of a solicitor’s bill following an application from a former client.
The first attempt to hear the case was halted earlier this year and has been relisted for at least two days starting on 11 July.
Mark Carlisle, founder of checkmylegalfees.com, said that clients of PI firms needed to understand what they were letting themselves in for and would not have agreed to pay the rates charged by some firms.
He said that the majority of retainers were conditional fee agreements where the client was responsible for any balance of unrecovered costs. Carlisle said the average hourly rate in the past eight years for junior staff members was around £327 – some 2.6 times higher than the current guideline rate for that level of fee earner outside London.
He added: ‘The higher the rates, the higher the likelihood that there will be a significant difference between the solicitor’s bill and the recovered costs, with the shortfall between the two - subject to any contractual cap set by the solicitor - being deductible from any compensation or damages obtained for the client.’
The figures and analysis will be disputed by personal injury firms who insist that clients gave their informed consent to deductions and that costs were proportionate at all times. But they give an insight into the arguments that will be made before the court and the grounds that costs recovery firms will rely on. It is understood that around 900 other clients’ cases are awaiting a decision in Belsner, but that number could increase if the court finds in favour of the client.
Informed consent will be a key battleground: cost recovery firms say that in fewer than 40% of agreements was the client notified that costs payable by the opponent were fixed. They say that 15% of CFAs impose no contractual cap at all, leaving the client at risk of losing more of their compensation to the solicitors.
There will also be a focus on the cost of after-the-event insurance, which Carlisle claims was charged to clients at an average of £231.60. The analysis suggests that this cover was essentially used to insure against a risk of having to pay out £216 to cover disbursements, with Carlisle claiming that might be the ‘worst insurance deal in history’.
This article is now closed for comment.