Informed consent – what is it and where are we?

Solicitor and own client assessments have been on the rise for some time now. The question of whether informed consent has been provided by the client for the solicitor to charge fees over and above that which had been allowed on an inter-partes basis has recently been considered.

Section 74(3) of the Solicitors Act 1974 provides that the amount allowed on a solicitor and client assessment cannot exceed what the court would have allowed as between party and party. However, CPR 46.9(2) says this can be overridden by written agreement. The question was whether such written agreement required the client’s informed consent. Two recent, and differing decisions in this regard are Belsner v Cam Legal Services Ltd [2020] EWHC 2755 (QB) (16 October 2020) and the more recent case of Swann v Slater & Gordon.

 

Belsner v Cam Legal Services Ltd [2020] EWHC 2755 (QB) (16 October 2020).

The retainer documents in this case explicitly provided that if the costs exceeded the costs recovered from the other party, the claimant would be liable for the excess. The success fee was capped at 25% of the damages but no overall cap was provided for the total costs which could be recoverable from her.

At first instance DJ Bellamy held that the client care letter contained sufficient information to apply CPR 46.9(2).

However, on appeal, Mr Justice Lavender disagreed and found that an explanation should have been provided as to the actual amount of the likely unrecoverable costs; not just its existence. He stated that:

‘A solicitor who wishes to rely on CPR 46.9(2) must not only point to a written agreement which meets the requirements of the rule, as the Defendant did, but must also show that his client gave informed consent to that agreement insofar as it permitted payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings. For this purpose, the solicitor must show that he made sufficient disclosure to the client.’

Accordingly, the claimant was successful in their argument that informed consent had not been given to her solicitors to deduct £385.50 in fees from her damages.

 

Swann -v- Slater & Gordon

A similar issue to that in Belnser has now been addressed in Swann v Slater & Gordon.

Over 400 ‘solicitor and own client’ assessments were brought before District Judge Rouine (the Regional Costs Judge).

In this case, each retainer in issue provided for a cap of 25% on any potential deduction from damages. There was also a cap on the total costs liability of 25%.

Although the wording of the retainers varied, DJ Rouine found that they were clear that the client’s potential liability could be more than that recovered on an inter-partes basis.

DJ Rouine went on to note the fact that the retainers did include a provision regarding the fact that the potential liability would be capped at 25% of the client’s award of damages; irrespective of how those sums were categorised. This distinguished them from retainers which has been subject of litigation in Belsner and which had not included a defined cap.

It was accepted by DJ Rouine that at the start of a personal injury claim, it is not possible to know the level of damages which will be awarded or agreed. It would be an impossible task for solicitors to provide every eventuality and the impact of that on the deduction from damages.

Taking the above into account, DJ Rouine was satisfied that providing the cap, and explaining what it may be, is sufficient information for the purposes of providing informed consent.

The pragmatic approach to managing the issue is to provide the client with the maximum potential amount which would be taken from the damages. This, and information regarding the existence of the cap, is sufficient for the client to give informed consent.

In each of these cases, the claimants were found to have given informed consent to the concept of a 25% cap on the potential deduction from damages.

Commentary

It is notable that, in these cases, the solicitors were acting on CFAs and thus it was them taking on the risk. If the bar for informed consent is set too high it may be that they are not rewarded for that risk. One would therefore question whether access to justice may be hindered if solicitors cannot be sure that they will be able to sufficiently recover their costs, or potential clients choose not to take on the risk of contributing so much to the costs.

Having said that, there should be no reason why sufficient information can be provided at the outset, as in Swann. Given the number of claimants in that action it does not seem that such a provision has stopped potential clients from choosing to instruct Slater & Gordon. It is, of course, not possible to know whether they would make the same choice in the knowledge that they now have following these decisions.

Ultimately, the best approach that solicitors can take is to be as clear as possible about the practical implications of the terms of the retainer and the effect on the client’s damages.

At the time of writing, the application to appeal the decision in Belsner has been granted. It is not expected that there will be any real clarity on the issue without a decision from the Court of Appeal.