Class action outfit Pogust Goodhead is facing a £2.2m claim for unpaid legal bills from another law firm, after the court ruled that retainers were clear enough to be understood.
In Seladore Legal Limited v PGMBM Law Limited, Master Pester effectively ruled against Pogust Goodhead by giving summary judgment against certain paragraphs of its amended defence and counterclaim.
The short judgment was part of a dispute between Pogust Goodhead (PGMBM) and specialist litigation firm Seladore, which claims it is owed £2,209,826.40 in unpaid legal bills. The firms entered into two retainers, both discounted conditional fee agreements.
The two retainers relate to two separate ‘workstreams’. Seladore worked on a proposed claim by PGMBM against the defendants in the Brazil dam collapse case and also worked on general litigation support.
PGMBM paid in full 15 of the 20 interim invoices amounting to £886,048.23 including VAT. Seladore issued and delivered its final statue bill relating to each of the two retainers totalling £3,095,874.63. The outstanding balance claimed by Seladore is around £2.2m.
As part of its defence PGMBM argued the retainers are unenforceable because they do not state the percentage by which fees are increased in the event of success – an alleged breach of s.58(4)(b) of the Courts and Legal Services Act 1990. PGMBM counterclaimed for the amount already paid to Seladore.
Master Pester said the test of materiality does apply to alleged breaches under s.58(4)(b). He found the ‘terms of the retainer are clear’ and noted that ‘the retainers were entered into between two commercial entities on a similar playing field’.
He added: ‘There is force in Seladore’s description of PGMBM as being “about as far removed from the position of the little old lady” as possible. However, for the purposes of the analysis which follows, nothing turns on the precise level of expertise or knowledge of CFAs which PGMBM did or did not possess.’
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The judge did not accept PGMBM’s submissions ‘that the retainers failed to state the increase at all’ and did ‘not think that the addition of the words “subject to rounding” had the effect of rendering the retainers unenforceable’.
Finding ‘literal compliance’ with the 1990 act and therefore no breach, the judge said: ‘I do not see any requirement under the 1990 Act for there to be a single identical rate for each grade of fee earner in any given retainer.
‘The retainers spelt out the position with sufficient clarity so that PGMBM would have no doubt what it was required to pay.
‘There were no breaches here which had a materially adverse effect on the protection afforded to PGMBM or on the proper administration of justice.
‘There was literal compliance with the 1990 Act, and therefore no breach. If I am wrong on that, then the breach was not material. The application therefore succeeds.’
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