In Sellers v Simpkins [2023] EWHC 3296 (SCCO) Senior Costs Judge Gordon-Saker considered the costs recoverable by a solicitor when their client terminates their CFA.
Background
The Claimant (client) instructed the Defendant (solicitor) under a CFA Lite dated 21 May 2015 in a personal injury claim. The Defendant conducted the claim until March 2021 when the Claimant terminated the retainer and instructed Fieldfisher instead. On 26 March 2021 the Defendant wrote to the Claimant notifying them that payment of their costs was required under the terms of the CFA:
“I have considered this carefully but once formal termination of my CFA has occurred in these circumstances I shall seek payment of the costs and disbursements due as per the agreement term indicated above.”
The personal injury claim settled by way of a JSM on 11 August 2021 on a global basis inclusive of costs. The Defendant was requested to provide details of their costs ahead of said meeting, however they failed to do so.
The Defendant was informed of settlement on 16 August 2021 but did not provide their bill, totalling just under £500,000, until 10 November 2022.
Detailed Assessment
The Claimant applied to the Court for an order for the assessment of the Defendant’s bill under s.70(2) Solicitors Act 1974 on 9 December 2022. This particular judgment relates to a preliminary issue hearing in relation to the validity of the retainer.
Initially the Claimant's position was to put the Defendant to proof of the retainer, on the basis that they suspected that it prevented the Defendant from charging anything and that it was unenforceable as it only provided for a 7-day cancellation period as opposed to the 14 days required under the regulations.
However, prior to the preliminary issue hearing the Claimant abandoned these arguments and instead alleged that the CFA limited the Defendant’s entitlement to costs to those recovered from the opponent in the underlying personal injury claim.
Therefore, the judge considered the terms of the CFA in detail. The question of whether there was a “cap” depended on how the CFA was terminated and the solicitor’s response to the termination. If the solicitor sought costs at once, rather than awaiting the outcome of events, then there was no cap on recovery.
The overall cap does not apply where the solicitor elects to claim their charges before the conclusion of the claim, but it does apply where the solicitor elects to await the outcome.
In this particular case, the Defendant was found to have requested payment of his basic charges. Judge Gordon-Saker outlined:
“It seems to me that while the Defendant did not “ask” for payment until he delivered a bill, in March 2021 he had exercised his right to decide that the Claimant must pay his basic charges, expenses etc without waiting for the conclusion of the claim. Effectively, he had said “I’ll stick”.”
In any event, there would have been no advantage to the Defendant in awaiting the outcome as the CFA Lite meant that no success fee was payable had the Claimant ‘won’ the underlaying claim.
It is clear that solicitors need to approach the termination of retainers with caution, both the timing and manner can have a considerable impact on the costs recoverable.
The Defendant’s bill will still be the subject of detailed assessment, with a hearing listed for April 2024.
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