Equitable victory for claimant lawyers

A personal injury law firm has won its case against an insurer which settled claims with clients behind its back, in a major victory for claimant lawyers.

The Supreme Court unanimously dismissed the appeal brought by the insurers, in Haven Insurance v Gavin Edmondson Solicitors [2018] UKSC 21. It upheld the Court of Appeal’s decision to allow the law firm’s claim for equitable interference against the insurer so that it could recover its costs under conditional fee agreements (CFAs).

The dispute stemmed from road traffic accidents involving six individuals insured by Haven. They entered into CFAs with Gavin Edmondson, which notified the claims via the online claims portal. Haven acknowledged the claims and then went direct to the individuals, offering to settle their claims faster and for a higher sum if they excluded their solicitors. All six individuals accepted the insurer’s offer and cancelled their CFAs. Gavin Edmondson then claimed against Haven for the fixed costs it might have recovered had the claims been settled in accordance with the pre-action protocol.

Although ‘modest sums’ were involved in each individual’s case, the court heard that the cumulative effect of Haven’s tactic could run to many millions of pounds.

The Supreme Court held that Gavin Edmondson are entitled to the enforcement of the traditional equitable lien against Haven, as the client owed a contractual duty to pay the solicitors’ charges. However, the Court said the equitable lien should not have been modernised in the manner undertaken by the Court of Appeal.

Delivering judgment, Lord Briggs said: ‘The careful balance of competing interests enshrined in the RTA Protocol assumes that a solicitor’s expectation of recovery of his charges from the defendant’s insurer is underpinned by the equitable lien, based as it is upon a sufficient responsibility of the client for those charges.

‘Were there no such responsibility, it is hard to see how the payment of charges to the solicitor, rather than to the client, would be justified. Furthermore, part of the balance struck by the RTA Protocol is its voluntary nature.’