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Conditional Fee Agreements - Pre-Action Protocols – Settlement - Solicitors Remuneration
2 December 2015
Court of Appeal: Laws LJ, Elias LJ, Jones LJ
The claimants had entered into Conditional Fee Agreement’s with six clients to pursue personal injury claims against the defendant insurer. The defendant insurers settled the claims on an inclusive basis directly with the claimant’s clients to avoid paying the claimant’s fees and disbursements. The claimant brought an action seeking equitable intervention from the court to recover their fees and disbursements from the insurers. At first instance this claim was dismissed but allowed on appeal.
The claimant’s entered into Conditional Fee Agreements ('CFA') with six clients to pursue personal injury claims following Road Traffic Accidents against the defendant insurer and their claims were sent to the insurer on the portal as per the pre-action protocol for personal injury claims. The CFAs incorporated the law society document and a client care letter was also sent to the clients. Additionally, each CFA was subject to the Cancellation of Contracts Regulations.
The defendant insurers contacted the clients directly and settled their claims on an inclusive basis to deprive the claimant solicitors of their costs and disbursements. The mandate of acceptance confirmed that the offer was accepted “in full and final settlement of my claim.”Article continues below...
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The claimant solicitors brought an action alleging that the defendant insurers’ conduct was unlawful and justified equitable intervention from the court to order the payment of their costs. In addition they alleged that the defendant insurers had induced breaches of contract, breached the Pre-action protocol and breached the Data Protection Act 1998.
The defendant insurers denied any wrong doing and maintained that there was nothing in the law to prevent a direct offer of compensation in such circumstances.
At first instance the Judge found in favour of the defendant and dismissed the claim on the basis on Khan’s Solicitors (a firm) v Chifuntwe  EWCA Civ 481. He held that in order for equitable intervention there had to be an element of collusion to cheat the solicitors out of their fees or that the paying party had to be on notice that the other party had a claim for fees and that neither element was present in this case. Furthermore he determined that the settlement had come at a time when the CFAs were still cancellable and that there was no breach of the Protocol as it was not mandatory.
The claimant appealed this decision on the issue of equitable intervention.
On appeal it was held that the participation in the pre-action protocol and portal scheme was itself implied notice of lien and satisfied the test in Khan. Furthermore it was held that even if the offers were made while the CFAs were still cancellable it was not enough to relieve the defendant of their liability due to this notice of lien.
The appeal was therefore granted and the defendant insurers were ordered to pay the claimant’s costs.
It was only right the appeal was allowed. The conduct of insures was totally unreasonable and unacceptable.
Sandra De Souza and Tom Dickinson, Anthony Gold Solicitors