In my last Dispute Resolution blog, I looked at the signature requirements for solicitors’ bills, both in relation to between the parties’ costs assessments, and solicitor and own client costs assessments.
In this blog post, I consider the signature requirements relating to:
- Conditional fee agreements.
- Damages-based agreements.
- Contingency fee agreements.
Summary
Here is a summary of the signature requirements under each type of agreement:
- Conditional fee agreements: no signature is required.
- Damages-based agreements: no signature is generally required, with one exception.
- Contingency fee agreements: a physical signature is required in all cases; electronic signature is not valid.
Conditional fee agreements (CFA)
There is no statutory or secondary legislation that requires a CFA to be signed and consequently, the law relating to electronic signatures is of no relevance, as there is no requirement for any signature in the first place.
Section 58 of the Courts and Legal Services Act 1990 (1990 Act), as amended, governs CFAs. Section 58(3) of the 1990 Act provides:
“(3) The following conditions are applicable to every conditional fee agreement –
(a) it must be in writing;
(b) it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement; and
(c) it must comply with such requirements (if any) as may be prescribed by the Lord Chancellor.”
This is part of a lengthy and detailed Act, where Parliament has gone to great lengths to set out what is required, permitted and prohibited in respect of CFAs , and has done so by primary legislation. It pointedly does not require the agreement to be signed.
This is reinforced by the fact that, in relation to Non-Contentious Business Agreements (the term used to refer to contingency fee agreements in section 57 of the Solicitors Act 1974), Parliament has required that contingency fee agreements must be signed. It is clear that Parliament has differentiated between CFAs and contingency fee agreements, and I am satisfied that a CFA does not need to be signed in order to be valid and enforceable.
The Conditional Fee Agreements Order 2013 does not require a CFA to be signed.
Nevertheless, from an evidential point of view (proving that the client did indeed enter in to, and agree to, the CFA) my clear advice is that it should always be physically signed by both parties, and this will be relevant to the key issue of informed consent.
Damages-based agreements (DBA)
DBAs are creatures of statute, specifically section 45 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which amends section 58AA of the 1990 Act.
Section 58AA(4)(a) states that the agreement “must be in writing”. There is no requirement for a signature in what is a lengthy section running to 10 subsections.
Again, this is in marked contrast to section 57(3) of the Solicitors Act 1974 which requires that a Non-Contentious Business Agreement, including contingency fee agreements, “shall be in writing and signed…”
Thus, I am satisfied that there is no requirement for a DBA to be signed.
The secondary legislation governing DBAs is the Damages-Based Agreements Regulations 2013 (2013 Regulations).
Regulation 3 deals with “Requirements of an agreement in respect of all damages-based agreements” and there is no requirement that a DBA be signed.
Regulation 5 imposes significant extra regulatory requirements in relation to employment DBAs, but again, there is no requirement for signature.
Regulation 6 does require a signature in one, limited, circumstance:
“6. In an employment matter, any amendment to a damages-based agreement to cover additional causes of action must be in writing and signed by the client and the representative.”
Here, Parliament has specifically required signatures, from both parties, in this one instance.
It follows that a signature is not required in any other circumstance in a DBA. The Explanatory Notes to the 2013 Regulations, which are not part of the 2013 Regulations, reinforces this:
“These Regulations apply to all DBAs, including those which relate to employment matters, entered into or signed on or after the date on which they come into force.”
The Explanatory Notes, envisage an unsigned DBA by the use of the word “or”. The Explanatory Notes also state that “Regulation 6 specifies that additional causes of action can be added to the agreement by written and signed amendment”, again making the point that these requirements apply only in that circumstance.
As there is no requirement for a DBA to be signed at all (except under Regulation 6), the issue of the validity of an electronic signature does not apply.
Nevertheless, from an evidential point of view, that is to prove that the client did indeed enter into, and agree to, the DBA, my clear advice is that it should always be physically signed by both parties.
Contingency fee agreements
Contingency fee agreements covering non-contentious work are specifically excluded from the provisions of 2013 Regulations by Regulation 1(4) of those Regulations:
“Subject to paragraph (6), these Regulations shall not apply to any damages-based agreement to which Section 57 of the Solicitors Act 1974 (non-contentious business agreements between solicitor and client) applies.”
Section 57(3) of the Solicitors Act 1974 provides:
“The agreement shall be in writing and signed by the person to be bound by it or his agent in that behalf.”
That is a clumsily worded provision as, clearly in any contract, both parties are to be bound, otherwise it is not a contract.
In the context of the Solicitors Act 1974 generally, this is a requirement that the client sign the Non-Contentious Business Agreement, but I advise that both parties (client and solicitor) sign the contract.
Thus, a contingency fee agreement does need to be signed.
The question then arises as to whether an electronic signature suffices. Electronic signatures are governed by the Electronic Communications Act 2000 (2000 Act).
Section 7 of the 2000 Act states:
“7. Electronic signatures and related certificates.
(1) In any legal proceedings—
- an electronic signature incorporated into or logically associated with a particular electronic communication or particular electronic data, and
- the certification by any person of such a signature, shall each be admissible in evidence in relation to any question as to the authenticity of the communication or data or as to the integrity of the communication or data.
(2) For the purposes of this section an electronic signature is so much of anything in electronic form as—
- is incorporated into or otherwise logically associated with any electronic communication or electronic data; and
- purports to be used by the individual creating it to sign.
(3) For the purposes of this section an electronic signature incorporated into or associated with a particular electronic communication or particular electronic data is certified by any person if that person (whether before or after the making of the communication) has made a statement confirming that—
- the signature,
- a means of producing, communicating or verifying the signature, or
- a procedure applied to the signature, is (either alone or in combination with other factors) a valid means of signing.”
This makes all electronic signatures admissible in legal proceedings, but that does not, of itself, overturn any statutory requirement for a traditional signature; that is dealt with by Section 8 of the 2000 Act.
Section 8 allows for modification of any enactment or subordinate legislation by way of statutory instrument to allow for an electronic signature where the original legislation requires a conventional signature (section 8(2)(c)).
No such statutory instrument has been laid in relation to section 57(3) of the Solicitors Act 1974. An electronic signature is not valid on a contingency fee agreement and any such agreement lacking the client’s physical signature is void.
However, my view is that if a client prints off an electronically communicated contingency fee agreement and signs the printed copy and scans in that printed copy and emails it to the solicitor, then there is compliance with Section 57(3) and the contingency fee agreement is valid.
