'This isn't over': Lawyers say secret commissions fight will continue

Lawyers leading cost recovery cases against personal injury firms say clients will not be deterred by a court decision this week blocking one course of redress.

The Court of Appeal ruled on Monday that Part 18 requests under the Solicitors Act could not be used to force law firms to disclose details of any commissions they might have received from arranging ATE insurance.

But the court’s ruling was clear that solicitors ought to tell clients what commissions had been paid if they were asked, even if there appeared to be no easy and cost-effective means of dealing with it. Lady Justice Andrews noted in Turner v Coupland Cavendish that denying such requests was ‘unwise’ and ‘unedifying’.

While the Part 18 route to redress has closed, lawyers who brought the claim say this is not the end of the matter.

Robin Dunne and Priya Gopal of Gatehouse Chambers, who represented the claimant in the Court of Appeal after being instructed by Leeds firm JG Solicitors, said that the appeal had not addressed the wider issue of transparency around commissions.

In an article entitled ‘Right question, wrong forum’, they said the court had been clear that solicitors cannot avoid answering enquiries from clients.

‘There are a multitude of cases where solicitors who act for former clients in costs claims are seeking information as to whether secret commissions have been paid as part of ATE premiums in low value RTA claims,’ they said. ‘This case makes it plain that this issue is extraneous to a solicitor and client assessment. It does not, however, put the matter to bed.’

If no answer is provided, they added, the client would be able to bring a claim for an account, which would be far more expensive than dealing with the issue within the confines of a Solicitors’ Act assessment. A solicitor who unreasonably refuses to answer is likely, considering Andrews LJ’s guidance, to have to pay the costs of any such claim.

The potential commission at stake in Turner was estimated to be no more than £25, based on an ATE premium of £245. Lady Justice Andrews said in her ruling that the only people who stood to gain from a successful challenge to commissions were those who have made an industry out of challenging solicitors’ costs.

Nick McDonnell, director and costs lawyers with Manchester firm Kain Knight, which represented the successful appellant in Turner, said the judgment had provided important guidance on the scope of solicitor-client assessments under section 70 of the Solicitors Act 1974, the proper function of the cash account and the use of Part 18 Requests for further information.

‘Part 18 can legitimately be used within a section 70 assessment,’ he said. ‘The court gives examples such as asking why so much time was spent on a particular task or why work was undertaken by a partner rather than somebody more junior.

‘What Part 18 cannot do is turn a Solicitors Act assessment into a fishing expedition designed to discover whether the client might have some separate claim outside the jurisdiction of the costs judge.’

McDonnell said clients believing they had paid a commission could bring a small claim or pursue the matter with the Legal Ombudsman, but the important factor now was that Part 18 requests was established to be the wrong mechanism for investigating it.

He added: ‘There’s also a significant practical point here. This wasn’t just happening in one case. Requests of this kind were being made across hundreds of assessments. Even where there was no evidence or particular reason to think a commission had been received, firms were being required to spend time and money dealing with what was, in effect, an implied allegation.’