Whitaker v Richard Slade & Company Plc  EWHC B17 (Costs)
Over the last 12 months we have seen a significant number of matters go before the SCCO regarding Solicitor own Client disputes. Whilst usually these relate to the level of fees incurred by Solicitors, recently, Master Brown heard a case regarding an issue over whether a specific sum for work done was a Contentious Business Agreement or not.
In the case of Whitaker v Richard Slade & Company Plc  EWHC B17 (Costs), a former client sought an assessment of £166,671.29 of invoices. The sum owed was in respect of legal fees following the parties entering into a retainer in 2014 which provided for hourly rates and monthly billing.
In March 2017 the parties entered into a Deed of Arrangement in which the lay client agreed to pay the sum of £86,000 for all the legal costs incurred. That sum agreed related to work done by the Solicitors up to the date of the agreement.
The lay client asserted that the agreement was to make interim payments and that the sums remained subject to assessment and in the alternative that it must be a Contentious Business Agreement within the meaning of section 59 of the Solicitors Act 1974, and should be set aside as being unfair and unreasonable.
Section 59 of the Solicitors Act 1974 states :-
(1) Subject to subsection (2), a solicitor may make an agreement in writing with his client as to his remuneration in respect of any contentious business done, or to be done, by him (in this Act referred to as a “contentious business agreement”) providing that he shall be remunerated by a gross sum (or by reference to an hourly rate), or by a salary, or otherwise, and whether at a higher or lower rate than that at which he would otherwise have been entitled to be remunerated.
(2) Nothing in this section or in sections 60 to 63 shall give validity to—
(a) any purchase by a solicitor of the interest, or any part of the interest, of his client in any action, suit or other contentious proceeding; or
(b) any agreement by which a solicitor retained or employed to prosecute any action, suit or other contentious proceeding, stipulates for payment only in the event of success in that action, suit or proceeding; or
(c) any disposition, contract, settlement, conveyance, delivery, dealing or transfer which under the law relating to bankruptcy is invalid against a trustee or creditor in any bankruptcy or composition.
The Solicitor contended that the intention of the agreement was that it provided for payment of a fixed sum for legal services to the date of the agreement without further assessment.
Master Brown held that an agreement in relation to a specific sum for work done was not a Contentious Business Agreement and was instead to be regarded as of benefit to the lay client rather than the Solicitors.
Master Brown rejected the lay client’s assertion that if the Agreement was not treated as a request for payment on account it must be a Contentious Business Agreement. Furthermore it was found that some agreements between Solicitors and their clients are outside of the scope of Section 59 of the Solicitors Act 1974. He went on to say that if he was wrong, and the agreement was a Contentious Business Agreement, then it was fair and reasonable and should not be set aside.
The bill was found to be fully compliant, clearly identified the work done and who it was done by. The hourly rates claimed were found to be significantly below commercial rates and the discount provided (which included a significant level of costs that had been written off) was favourable to the lay client. Furthermore, Master Brown noted that the lay client was an experienced businessman and a sophisticated client who had taken independent legal advice and knew that the compromise would preclude assessment. Subsequently Master Brown felt that setting it aside would result in unfairness to the Solicitor.
This is yet another example of the Courts considering the fairness of a result to the lay client, however in this matter the Court found the agreement was more beneficial to the client than the Solicitor. It is clear that Master Brown gave serious consideration and held significant weight to the fact that the lay client had been advised to get independent legal advice, which he did, and that he was regarded as a sophisticated client.
This case highlights how important it is that agreements between Solicitors and their clients be explicit and any agreements regarding reductions should include a provision regarding the position in relation to detailed assessment.
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