Widely regarded as the 'personal injury case of the year', Belsner v CAM Legal Services [2022] EWCA Civ 1387 has grabbed the attention of legal services providers even if it will have escaped consumers' notice. For solicitors, chiefly those dealing with low-value personal injury claims, the verdict handed down on 27 October will come perhaps as both a success and a relief.
After Darya Belsner sustained minor injuries following a motorbike road traffic accident, her solicitors issued her claim on the Ministry of Justice (MoJ) portal and signed her up to a conditional fee agreement (CFA). The CFA provided that her law firm was able to claim costs from her over those which she might recover from the opponent should she be successful.
Mr Justice Lavender in the High Court subsequently upheld an appeal from her and ordered the solicitor to repay the success fee, which was £295.50. However, Master of the Rolls (MR) Sir Geoffrey Vos in the Court of Appeal ruled that the firm had made 'fair and proportionate' deductions from their client's damages.
Though the ruling was welcome to personal injury solicitors who use these types of funding agreements, comments made by the MR should be noted. The ruling stated that CAM Legal Services may not have complied with the Solicitors Regulation Authority (SRA) code of conduct in that they 'neither ensured that the client received the best possible information about the likely overall cost of the case, nor did they ensure that the client was in a position to make an informed decision about the case'. However, the terms in their retainer allowing them to charge the client more than the costs recoverable from the defendant were not deemed unfair, meaning the costs charged were reasonable.
The judgement will be of concern to consumers pursuing similar solicitor-own client costs litigation and to their representatives. The MR critiqued the business model for bringing such cases to the High Court, suggesting that the Legal Ombudsman would be a better, more suitable and more cost-effective way of challenging bills such as these. Similar consumer cases currently stayed pending the outcome of Belsner are said to be in the hundreds.
One of the prominent issues in Belsner was the distinction between contentious and non-contentious legal work in accordance with the Solicitors Act, and its interplay with CFAs and the information given at the outset of a case. Nick Emmerson, the Vice President of The Law Society, urged the MoJ to ensure the civil justice system has a 'solid foundation of clear legal costs provisions' on which solicitors and their clients can rely on. In a similar vein, Nick McDonnell, a director and costs lawyer with Kain Knight who acted for CAM Legal Services, said the decision was a victory for the legal profession but reiterated the MR's call for reform, specifically on the contentious vs non-contentious business issue.
The high-profile judgement, together with a similar judgement in the connected case of Karatysz v SGI Legal LLP [2022] EWCA Civ 1388 handed down the following day, provide welcome guidance to solicitor-client funding arrangements and particularly on the deduction of success fees. Such clarity may be of particular importance should fixed recoverable costs continue to remain static and without a regular and formal process for adjustment. Deductions from damages will increase over time should existing and future fixed-costs regimes fail to track inflation. This would be detrimental to consumer redress but necessary to ensure the sustained availability of consumer representation.
With regard to the contentious vs non contentious business definition, urgent action is needed to provide clarity to consumers and their representatives on the distinction between the two. It is a fundamental maxim of the law and those ruled by it must be able to understand it, and at present legal practitioners continue to have to communicate archaic and convoluted rules to consumers for whom the world of law is further alienated.