Reaction to Belsner—costs ‘case of the year’

The case concerned deductions from damages recovered on behalf of a client, Darya Belsner, in a motorbike crash claim funded via a conditional fee agreement. Some 900 cases have been stayed pending the judgment.

Belsner’s road traffic accident (RTA) portal claim settled for £1,917 plus fixed costs of £500 plus disbursements. The solicitors kept the fixed costs and gave the clients the damages minus a success fee of £321 (25% of the damages). Belsner later instructed new solicitors, checkmylegalfees.com to challenge this deduction.

At first instance, the judge held the solicitors owed the client fiduciary duties when their retainer was being negotiated, therefore the client’s ‘informed consent’ was required. He permitted the solicitors to take only the £500 fixed costs and a £75 success fee (15% of the fixed costs). The case was then appealed.

Last week, however, the Master of the Rolls, Sir Geoffrey Vos, Lord Justice Nugee and Sir Julian Flaux held the solicitors’ deductions were fair and reasonable and did not need to be paid back.

Sir Geoffrey, giving the lead judgment, said the judge was wrong to say the solicitors owed the client fiduciary duties in the negotiation of their retainer and were not obliged to obtain the client’s informed consent to the terms of the conditional fee agreement.

Nevertheless, he also stated the solicitors did not comply with the Solicitors Regulation Authority code of conduct since ‘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’.

Moreover, Sir Geoffrey criticised the current rules on costs: ‘I have concluded that the current position is unsatisfactory in a number of respects… the distinction between contentious and non-contentious costs is outdated and illogical. It is in urgent need of legislative attention... it is unsatisfactory that, in RTA claims pursued through the RTA portal (and perhaps the Whiplash portal), solicitors seem to be signing up their clients to a costs regime that allows them to charge significantly more than the claim is known in advance to be likely to be worth.’

Nick Emmerson, vice president of the Law Society, which intervened in the case, said: ‘It is crucial that solicitors can be paid equitably for the vital work they do.’ He urged the government to ensure ‘clear legal costs provisions on which solicitors and their clients can rely’ are in place.

Commenting on the case for LexisNexis News, Jeremy McKeown, barrister at 12 King’s Bench Walk, said: ‘As it stands, the Court of Appeal’s decision represents a resounding win for the status quo as it was understood and practised by solicitors.

‘On the other hand, it represents a mighty rebuke of that same status quo, indicating that change may be coming. Claimant solicitors should be in no doubt that Belsner will be waved before the lower courts by parties hoping to hold solicitors to what the Court of Appeal has said is proper practice when advising claimants about the real-world impact of the CFA terms they are signing.’