The decision of the Court of Appeal in Belsner v Cam Legal Services is now five months old, but is still the source of much debate, so here is a summary of what it did, and did not, decide and as I set out below, much of the judgment was obiter, that is not necessary for the decision on the facts of this case, and therefore not binding.
Ironically, precisely because the Court of Appeal was dealing with a non-contentious matter, that is unissued litigation, its findings, some of them very significant, are binding in unexpected areas of work, such as commercial work, conveyancing, wills and probate and so on.
Thus, the decision is being wrongly interpreted as applying to things that it does not apply to at all, and largely being ignored by those lawyers dealing with non-contentious work, where it most certainly does apply.
Firstly, in this case the substantive matter had never been issued, as it was settled at Stage 2 of the Road Traffic Accident Portal process and, therefore, was classed as non-contentious.
The Court of Appeal was highly critical of the continuing existence of the concepts of contentious and non-contentious business under the Solicitors Act 1974 and the very different costs regimes applying stating:
“…the distinction between contentious and non-contentious costs is outdated and illogical. It is in urgent need of legislative attention.”
I dealt with the issue of contentious and non-contentious business in my recent piece on this blog: Contentious and non-contentious business.
The Court of Appeal’s comment caused the Civil Justice Council to reopen its consultation on this point.
An Act of Parliament will be needed to deal with the issue as the concept itself stems from the Solicitors Act 1974, and earlier legislation, whereas most costs matters are dealt with in Rules of Court, currently the Civil Procedure Rules.
Thus, the Court of Appeal stressed that the contentious and non-contentious split remains in full force and then it considered some of its effects.
Thus, as mentioned above, this decision is not binding in relation to issued cases, unless the relevant part applies to all cases for all clients, and some of it does, for example the ruling that solicitors do not owe any fiduciary duty to clients in relation to the terms of the retainer.
This is an important point and ends forever the ridiculous suggestion that solicitors are under some sort of mad duty to refer clients to competitors who may be cheaper, or that clients need to be separately advised by other solicitors before entering into a retainer.
Thus, part of the decision deals with non-contentious work, part of it deals on an obiter base with contentious work, and part of it deals with all work, both contentious and non-contentious, and that will include wills, probate, conveyancing and so on.
Secondly, and consequent upon the finding that this was non-contentious business, the Court of Appeal held that section 74(3) of the Solicitors Act 1974, and the associated CPR 46.9(2) do not apply to cases pursued through the Pre-Action Protocols, but only to cases actually issued, but added:
“Secondly, there is no logical reason why Section 74(3) and Part 46.9(2) should now apply to cases where proceedings are issued in the County Court and not to cases pursued through the Pre-Action Protocols.”
Section 74(3) of the Solicitors Act 1974 provides:
“The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim.”
In fixed recoverable costs cases, that is fixed recoverable costs only.
However, CPR 46.9(2) disapplies section 74(3) if the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.
Thirdly, in an important finding that applies to all solicitors’ retainers of all kinds, whether litigation, or wills, conveyancing, or whatever, the Court of Appeal held that solicitors do not owe potential clients fiduciary duties in the negotiation of the retainer.
Fiduciary is generally interpreted as meaning duty of trust.
Fourthly, although the solicitors were not obliged to obtain the client’s informed consent in the way set out by the High Court, whose decision was overturned, all solicitors and all retainers of any kind must ensure that every client receives the best possible information about the likely overall cost of the case so that the client is in a position to make an informed decision.
This comes close to requiring all solicitors to obtain informed consent from all clients in all types of work, a finding not being picked up by the legal profession as a whole.
This ruling stems from the duty in the Solicitors Regulation Authority’s Code of Conduct and is not confined to litigation matters, contentious or otherwise.
So, no fiduciary duty pre-retainer, but maximum transparency. “We are expensive – but you get what you pay for-here is the cost.” This is a very important – and very sensible and practical ruling, which is not getting the attention which it deserves.
Fifthly, the Court of Appeal held that a term in a solicitor/client retainer allowing the solicitor to charge the client more than the costs recoverable from the other side was not unfair within the meaning of The Consumer Rights Act 2015, but as we have seen above, will be illegal in a contentious matter unless the client’s written agreement is obtained.
Again, this is an important finding that applies to all litigation cases, and is a recognition that solicitors, as well as consumers, have rights too.
Sixthly, assessment on a non-contentious matter, including as here unissued litigation cases, is under Paragraph 3 of the Solicitors’ (Non-Contentious Business) Remuneration Order 2009.
The test under that order is whether the solicitor’s costs are fair and reasonable having regard to all the circumstances of the case.
Belsner is an important and very well-reasoned decision. Here, I will not go into its savage attack on Checkmylegalfees and others, but what the senior judiciary are recognising is that if lawyers are attacked in this way, as legal aid lawyers have been, then we will simply do other work.