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Belsner v CAM Legal Services Ltd [2020] EWHC 2755 (QB) stated that the lawyer must be fully informed so that his client can give informed consent when it comes to recovering the errors of the fees from them. It was argued that, in this case, the defendant did not properly inform the claimant despite the nature of the retention letter. Following this decision, hundreds of similar claims were filed alleging that consumers did not give informed consent and, therefore, should be reimbursed for their successful payments and failure of the costs that should be met.
Judges at the Court of Appeal found that the deductions made were “just and reasonable” and therefore should not be reimbursed. However, lawyers must ensure that the client receives “The best information about the total cost of the case” and they are committed to making informed decisions in order to comply with the SRA’s procedures.
Costs that can be recovered in Personal Injury Claims
In most low value personal injury claims, recoverable damages are determined, which is a set amount that the winning party can recover from the losing party. In most cases, attorneys work on a Custom Fee Agreement (CFA) therefore, contract with their customers to ensure that the additional costs incurred by them, which cannot be returned, will be paid by their customer. These non-refundable fees are deducted from their client’s damages, and the success fee is usually 25% of the damages. At one time, it was also possible to pay for success from the defeated party, however, after the Jackson Reforms this was abolished.
At very reasonable and affordable prices, it is possible to recover the lost party, which is why many personal injury firms can do well. Assuming that the breach does not significantly affect the client’s damages, hopefully, the lawyer and client will be in good terms with the arrangement; the client is assisted in making a claim with the expertise of a professional, and both are compensated fairly.
The Facts of Belsner v CAM Legal Services Ltd [2020] EWHC 2755 (QB)
In February 2016, the claimant was involved in a car accident. The claimant was riding on someone else’s motorcycle. After crashing into a car, he was knocked down and suffered multiple injuries. Following the incident, the claimant contacted the defendant and, in March 2016, sent her a customer protection letter and a copy of its Terms and Conditions of Business and the CFA.
The CFA and the Business Rules and Regulations provide:
“If your claim is above the minimum claim limit, you can claim from your opponent or all of our costs and expenses.“
“The successful payment will be deducted from your damages at the end of your claim. The success fee will not exceed 25% of the damage (including VAT), although there may be other fees and costs deducted from the damage such as insurance costs.“
“We reserve the right to charge you the actual costs in consideration of the costs recoverable from the arbitrator.“
“Most Personal Injury claims are settled through negotiation after receiving medical evidence and information about financial losses. I estimate that the basic costs for the work required to obtain this information would be around £2,500 (excluding VAT and fees – see paragraph 26 below). We will update this estimate of costs every six months and let you know if we find that the estimates are higher. This may vary for a number of reasons…“
“We will not bill you for our original fees, success fees and fees until the Custom Fee Agreement is completed. It is important to understand that you are responsible for paying the bills. However, if you win your claim I expect to recover some of our fees and expenses from your opponent.“
“Any fees agreed between us shall exceed any fees recoverable from the other party. This means that there may be a portion of your costs that you retain even if an order for costs is made against the opposing party or parties.“
The defendant pursued the claim on behalf of the claimant and the liability was accepted by the driver. The underlying claim was settled and the claimant was awarded £1,916.98 in damages and £1,783.19 (inc VAT) in costs and expenses. The defendant paid £1,531.48 to the claimant, less the successful bid of £385.50 (although their calculation seems to be wrong here, and in fact, it could be more success rate). However, the defendant was unable to issue a bill of exchange or invoice at this time. Accordingly, the claimant instructs other attorneys to file a Section 8 Claim Form requesting that the defendant submit a bill of lading for the claimant.
The defendant then sent his bill to the claimant; the defendant’s professional fees were £3,588.40 plus VAT of £717.67. Therefore, in total, the defendant’s costs are £4,306.07 (inc. VAT). We have set forth below the error alleged by the Defendant in this regard.
Total bill by the defendant = £4,306.07
Claimant claims = £385.50
Actual costs received = £1,783.19
Short costs = £2,137.38
The defendant therefore submitted that, as the claimant had received costs of £1,916.98, if the plaintiff had sought the balance of costs from the claimant, he should have paid them as well. that’s £220.40 on top of the success rate and everything. was returned in ruins. If the Defendant had chosen to enforce the payment of default fees to the Claimant (which appears to have been agreed in the CFA and Business Terms) the claimant would have been adversely affected, regardless of whether it happened to him. succeeded in his claim.
determine QBD
The Court considered whether the requirements under CPR 46.9(2) were met. CPR 46.9(2) provides that “Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and the client have entered into a written contract expressly agreeing to pay the solicitor any higher fees than the client can afford bringing the other party to trial.“. Section 74(3) states “the amount allowed on an assessment of costs or bill of costs for any matter relating to proceedings in the county court shall not exceed the amount allowed for the same between groups and groups of those actions…“.
The Court carefully considered the definition of “written consent” and stated that a written agreement in a contractual manner is not sufficient. The claimant must have been informed in order to make a decision. For example, if the claimant had been informed of this matter he could have returned from only £500 to £550. he may have considered the advice (especially as he had been told the costs could be in the region of £2,500) The Judge said there was no weight on the Defendant to present this information, especially if they have paid. advised (correctly) about the part of the settlement of the claim. The Judge said “it does not go into explaining all the details and complexities of the Civil Procedure Rules and Protocol… Nor was it required to define all the possible outcomes of the Claimant’s claim. Rather, it involved taking the outcome that the Defendant intended for its estimate of costs and showing what costs could be recovered in that case.“. Finally, the Court found that a lawyer who wishes to rely on CPR 46.9(2) must have a written contract with their client, because they have given the information necessary to gave informed consent to that agreement. understood and agreed to pay the attorney any fees that would exceed the amount they could recover from the other party in the proceeding. The requirement for consent was based on the knowledge that comes from the true nature of the relationship.
Following this decision, hundreds of similar claims were filed alleging that consumers did not give informed consent and, therefore, should be reimbursed for their successful payments and failure of the costs that should be met. This decision (and the decision of the Court of Appeal) is therefore beneficial for any firm that solicits their clients.
Court of Appeal
On 4 to 6 October 2022, the Court of Appeal heard the appeal in this case, presided over by the Lord Justice Flaux and Lord Justice Nugee. In the Appeal, the Court heard such claims that recovery lawyers received 12 times the amount of money recovered by their clients. This, of course, is at odds with the Judge’s preference in the case below.
The CoA Decision was delivered on 27 October 2022. It held that CPR 46.9(2) and Section 74(3) of the Solicitors Act 1974 did not apply to claims brought through the RTA portal (such as this ) unless the local court. jobs were released. Therefore, the QBD judge erred in holding that the defendant owed the claimant a duty of good faith in negotiating their retainer. The defendant’s deductions are “just and reasonable in all the circumstances” and no successful award is required to be paid to the claimant. However, solicitors must ensure that the client receives “the best possible information about the full cost of the case” and has the opportunity to make an informed decision in compliance with the SRA Code of Conduct.
Although the plaintiff was successful in all aspects of the law, the Court noted that claims pursued through the RTA portal often result in the plaintiff being assessed for liabilities greater than the value of the claim. . Although the defendant in this case was not awarded to the claimant, this is not a very acceptable method so that customers are not left out of pocket.
The Judge said “The Solicitors paid their fees at a fair and reasonable level after the hearing, even though they should have told the Client what he was going to get from the fixed fees in the RTA portal, and even if they had to. agreed before they entered the CFA to the cap they would only apply later… In the future, hopefully I don’t think lawyers will impose CFA or other fee arrangements on their clients offering fees they wouldn’t dream of paying properly”
Notes for Lawyers
Solicitors should ensure that their clients are fully informed about their fees. A buyer should have enough information to make a decision about the prices he will pay. Application letters must be in writing. Information about fixed fees should be included in cover letters, however, care should be taken to ensure that this information is clear to the layperson. The most difficult thing is that the judgment is so sudden. Therefore, it is very difficult to predict the way it will go, by showing the costs involved. Alternatively, the limit on your client’s liability(s) in terms of payments allows you to provide a clear position on payments (for example, a percentage as a general cap on payment defaults can be paid). The QBD’s decision was based on the negative view that the client may owe more to their solicitor than they will pay in fees. Provisions are in place in the holder to prevent this and, therefore, protect the firm from future investigations of charges. The CoA ruling confirms that solicitors must ensure that the client receives “the best possible information about the full cost of the case” and has the opportunity to make an informed decision in compliance with the SRA Code of Conduct.
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