Even though we have had 300 years of case law, there is still great uncertainty about the extent of solicitors’ liens, a subject which has become of much greater importance since the legalisation of conditional fee agreements and the virtual abolition of civil legal aid, as solicitors are now often acting on credit for clients throughout the whole case, rather than billing monthly, or having the security of legal aid.
Solicitors need the protection of a lien over damages in order to get their costs; otherwise we will stop acting for people who cannot afford to pay money on account. This was accepted by the Supreme Court in Gavin Edmondson Solicitors v Haven Insurance Co Ltd, and many of us thought that that was that.
However, the Court of Appeal, in a curious decision, to put it mildly, has sought to distinguish that decision, but for all intents and purposes has declined to follow a very recent Supreme Court decision. The relevant decision is Bott & Co Solicitors Ltd v Ryanair DAC. Bott & Co Solicitors Limited has applied to the Supreme Court for permission to appeal in what is a case of significant public importance concerning consumer protection.
Contrary to what the Court of Appeal may think, allowing clients more easily to cheat their solicitors, and that is what we are talking about, will simply lead to a refusal by the legal profession to act on credit. In other words, solicitors will insist on money or security on account, and it will likely be those of limited means who will be denied access to justice.
One of the key flaws in the reasoning and logic of the Court of Appeal in applying a common law principle in the Ryanair case is its apparent failure to understand the movement in the last 20 years, sanctioned by Parliament, effectively to force parties in potential litigation to take pre-action steps to attempt settlement rather than issue proceedings. This is reflected in the Pre-Action Protocols, which now cover every single type of civil action in England and Wales, together with the more formal portal structure for low value personal injury claims.
If the Court of Appeal’s decision is allowed to stand, solicitors will find themselves denied the protection of the equitable lien for the costs of work done in the pre-action period, even where such work is expressly contemplated by the retainer, and is required by the Pre-Action Protocol approved by Parliament. The decision is a nonsense, and a dangerous anti-consumer nonsense which can be summarised in the old expression that the law, like the Ritz, is open to everyone.
I deal in detail below with the Ryanair case. I also deal with the West London Law Ltd v Sandhu case where, in another strange decision, the High Court refused a solicitor a lien in a legally-aided case. Thus, in 2019, we have already had a Court of Appeal decision and a High Court decision refusing liens, in spite of the Supreme Court’s decision in Gavin Edmondson last year. I also look at the question of direct/public access barristers and liens.
Solicitors denied lien: the Ryanair case
In Bott & Co Solicitors Ltd v Ryanair DAC, the Court of Appeal upheld the High Court’s decision that Ryanair was entitled to respond directly to passengers seeking compensation through solicitors, and had no liability to pay solicitors who had assisted in the claims. Since the High Court ruling, the Supreme Court had given judgment in Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd.
The High Court judge here had been bound by Meguerditchian v Lightbound to hold that mere negotiation by a solicitor resulting in recovery for a client could not give rise to a lien, but rather there had to be some form of proceedings, litigation or arbitration, but in Gavin Edmondson, the Supreme Court had said that the fact that no proceedings had been issued was not fatal to the equitable right of the solicitor. Here, the Court of Appeal said that the distinction between cases with or without proceedings could not survive the decision of the Supreme Court in Gavin Edmondson, and the boundary had shifted.
The key to fixing the boundary was to examine why equity will recognise a solicitor’s right to be paid and the courts had stated that access to justice lay behind the development of the principle. Here, the Court of Appeal said that although formal proceedings were no longer necessary, the solicitor’s services must still be recognisable as litigation services, promoting access to justice. This would include conducting or contemplating litigation, and would encompass proceedings under various protocols, such as the portal process as in Gavin Edmondson. However, the Court of Appeal found that the flight compensation claim scheme was largely mechanical and formulaic, and did not constitute litigation services required to promote access to justice. The Court of Appeal held that passengers were entitled to use third parties to assist with their claim, but must go to the Ryanair claims process in the first instance.
In Gavin Edmondson, the Supreme Court said:
“It is simply wrong in my view to seek to distil from those cases a general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges.” (Paragraph 58.)
Here, the Court of Appeal quoted from the Supreme Court’s decision at paragraph 1, setting out the basis of the court’s recognition of a solicitor’s lien:
“It is a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice. Specifically it enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit. It is called a solicitor’s lien because solicitors used to have a virtual monopoly on the pursuit of litigation in the higher courts. Nothing in this judgment should be read as deciding whether the relaxation of that monopoly means that the lien is still limited only to solicitors.”
Although this is an equitable remedy, the Court of Appeal considered that the statutory definitions of litigation captured the essence of the principle underpinning the right to a lien. The court quoted section 119 of the Courts and Legal Services Act 1990, which defines “litigation services” as:
“… any services which it would be reasonable to expect a person who is exercising, or contemplating exercising, a right to conduct litigation in relation to any proceedings, or any contemplated proceedings, to provide.”
In section 87 of the Solicitors Act 1974, “contentious business” is defined as:
“… business done… in or for the purposes of proceedings begun before a court or arbitrator”.
The Court of Appeal said that this would include proceedings under one of the many protocols that now exist, as well as, potentially, alternative dispute resolution (ADR), and the court made the point that ADR by definition only comes into play when there is a dispute to resolve. Here, the Court of Appeal said that unless and until Ryanair refused a claim, there is no dispute.
In Gaynor v Central West London Buses Ltd, Dyson LJ said at paragraph 17:
“In my judgment, ‘contemplated proceedings’ are proceedings of which it can be said that there is at least a real likelihood that they will be issued. Until the potential defendant disputes the claim, it is not possible to say that proceedings are contemplated. Advising a client as to whether he or she has a good prima facie case and writing a letter of claim are not enough to amount to litigation services.”
The Court of Appeal here went on to say:
“The making of a claim under Regulation 261 is largely mechanical and formulaic. It requires little more than the flight distance and the length of the delay, in addition to details of the ticket purchase. The amount of compensation that a delayed passenger is entitled to receive is fixed by the Regulation. It is not a case in which the quantum of damages has to be evaluated. Bott’s evidence is that the “vast majority” of claims do not require the issue of court proceedings; and it claims a 99 per cent success rate. I do not consider that the services provided by Bott in processing that vast majority can be said either to be ‘litigation services’ of the kind that Lord Briggs must have had in mind; or to be required in order to promote access to justice, unless and until Ryanair disputes a claim. In addition, to recognise the existence of an equitable right would place a solicitor in a far more privileged position than a claims handler performing the same services. I cannot see any justification for that; especially since the rationale for the equitable right is not motivated by any fondness for solicitors. If a claim is disputed, different considerations will arise.
In my judgment, therefore, where Bott simply writes a letter of claim or assists a client to complete the on-line form, and the claim is paid in response to the letter or the form, it is not entitled to an interest in the compensation that equity will protect. I would reject this ground of appeal.” (Paragraphs 58 and 59.)
Comment
The senior judiciary needs to think through rather more carefully the whole issue of access to justice and litigation and how it may be delivered. At one level, lawyers are being encouraged to use portals and follow protocols and do everything to avoid litigation, and yet Bott & Co Solicitors Limited appear to be punished for using such a scheme, and for making significant profits from it.
What on earth is the relevance to the legal principles of the fact that Bott’s income from claims against Ryanair was over £100,000 a month? (see paragraph 16 of the judgment).
What is the relevance of the number of claims that Bott were handling, except to show the success of the scheme and the attraction to members of the public?
So, at one level, we are consistently urged to be efficient and be a business, with the provision of legal services opened up to every Tom, Dick and Harry, but when a firm does exactly that, they are punished by the courts by being refused a lien.
I can see no logical difference between the pre-action road traffic portal, where 99% of cases are settled, and the scheme operated by Bott & Co Solicitors Limited. This decision should be overturned by the Supreme Court.
No solicitor’s lien where client legally-aided
In West London Law Ltd v Sandhu, an appeal against a conditional striking-out order, the High Court judge held that claimant solicitors could not recover fees for work undertaken for a legally-aided client by invoking the court’s equitable jurisdiction to intervene to protect a solicitor’s equitable lien. The ruling highlights that a solicitor’s equitable lien cannot arise in respect of legally-aided, as opposed to privately-funded, work.
West London Law Limited had acted for a legally-aided client in litigation against his son, which succeeded, with costs awarded to the legally-aided client. The legally-aided client died while his son’s appeal was pending. The legally-aided client’s other son, as executor, continued instructing West London Law Limited, on a fee-paying basis. The appeal failed and the other son was awarded costs.
The two sons settled the litigation without involving their solicitors and, acting in person, they entered into a Tomlin order providing for assessment of the legally-aided costs.
In the related settlement agreement, the other son gave up the right to enforce any costs orders against the first son.
West London Law Limited claimed their costs incurred in the litigation from the two sons, contending that they had agreed to cheat West London Law Limited out of their costs, or to compromise the litigation, on notice of West London Law Limited’s costs claim, without preserving West London Law Limited’s rights.
The court below held that there was a potential cause of action, citing case law including
Gavin Edmondson Solicitors v Haven Insurance Co Ltd, but the particulars of claim lacked a “fundamental building block”: the solicitor’s lien. Therefore, unless West London Law Limited amended its claim, it would be struck out. On appeal, the High Court judge reiterated two of the requirements for a solicitor’s equitable lien:
- The client’s responsibility for the solicitor’s charges.
- A fund in which the solicitor effectively claims an interest to get his fees paid, which could be cash or a chose in action such as a settlement agreement or court order.
Since legally-aided clients have no personal liability for costs, no solicitor’s lien could arise.
The judge rejected West London Law Limited’s submission, based on obiter remarks of Lord Denning in Manley v The Law Society, that an exception existed for legally-aided work, allowing equity to intervene even without a lien. The conditional strike-out was overturned in relation to the privately-funded work. The particulars of claim could have been clearer, but they identified the security sufficiently as the rights of the legally-aided client’s estate to commence detailed assessment against the first son.
Barristers’ liens
Suppose a barrister is acting as a direct/public access barrister, instructed direct by the lay client, without the intervention of a solicitor, and the case is won and the defendant insurance company pays the lay client direct. If a solicitor had been involved, then there is no doubt that the solicitor would have a lien over the damages, and that lien would include all of their costs, including counsel’s fees, and the insurance company would have to pay all of the fees to the solicitor and take its chance with getting the money back from the lay client. That is the effect of case law dating back to 1729, most recently confirmed by the Supreme Court in Gavin Edmondson Solicitors v Haven Insurance Co Ltd.
However, barristers are not allowed to hold client money, and it is trite law that costs belong to the client. In those circumstances, I am satisfied that a direct/public access barrister does not have a lien, and indeed that a barrister can never have a lien. I suspect that this situation has arisen because, in allowing barristers to act direct for clients, this point was never considered.
The whole topic of liens needs revisiting, and the best way of doing this will be to codify the law in a new section of the Solicitors Act 1974, rather than have different courts arriving at different conclusions on apparently the same facts, and having to trawl through 290 years of case law.
