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Anthony v Collins and the need to get the retainer right

Until the indemnity principle disappears, there will always be the need to make sure that the retainer between solicitor and client is clear. This was again highlighted in the recent judgment of Deputy Master Friston in Anthony v Collins.

The case arose out of a dispute that followed the death of the claimant’s father. The claimant entered into a conditional fee agreement (CFA) with contested wills and probate lawyers in March 2015 to potentially challenge the will. In May 2016, after the defendant admitted that it was not valid, they agreed a second CFA for the purposes of securing letters of administration.

After this was done, the claimant issued possession proceedings against the defendant in relation to his father’s house, and a few months later entered into a new CFA to cover this part of the case. The defendant gave in and settled, agreeing to pay indemnity costs.

The claimant sought costs of £57,000 for the possession proceedings, inaccurately said in the bill to be conducted under a private retainer on hourly rates.

His solicitors repeatedly refused requests to disclose any funding agreement, but eventually withdrew the bill and replaced it with one that was still not accurate about the funding arrangements. The defendant alleged misconduct by reason of miscertification.

Deputy Master Friston rejected an application for provisional assessment as he could not understand the retainer documentation. Giving his ruling on the detailed assessment, he said of the retainer documentation:

“I should explain that it is quite unlike anything I – or, I suspect, any costs judge – have ever seen before. Some of it was provided to me electronically but, when printed onto paper, it filled an entire lever-arch file.”

The first CFA was 115 pages long, including a 48 page “disclosure kit” which the solicitors said the client should read first.

The judge described this as an unreasonable request, stating that it took him just under two hours to read the CFA, which was simply too long and too opaquely drafted to expect any client to read it, “especially a consumer client – in this instance, a taxi driver.”

Not only was the CFA’s structure difficult to follow, but it was also:

  • Remarkably repetitious and prolix.
  • Littered with typographical errors.
  • Replete with language that was anything but easy to understand.

Put simply: “In short, it is a badly drafted document. The same can be said of the other two agreements”.

Deputy Master Friston found that the first CFA also included obtaining letters of administration, and that it was varied by the second so as to make a single contract of retainer which became spent when the letters were granted.

The third CFA was “a relatively svelte 30 pages long” and “slightly” better written. It said the agreement was “conditional upon you getting insurance cover to cover the risk that you may need to pay the legal costs of the other side, and we must approve the terms of the cover”. No such cover was ever taken out.

The firm’s principal, Terence Johansson, said that this was included by mistake. However, the judge rejected the various arguments that the clause was impliedly disapplied or waived; for one thing, the claimant was unaware of the condition’s existence, making it impossible for him to waive. In any case, it would have been a variation rather than a waiver. As such, it ought to have been in writing.

The deputy master took the view that the after the event (ATE ) insurance condition was a condition precedent to the making of the third agreement and that it could not be disapplied by the parties’ conduct. As such, he found that the third agreement was never made:

“It is not in dispute that the possession proceedings were intended to be funded on a conditional fee basis, so I conclude that the claimant entered into an unwritten conditional fee agreement, this being in breach of section 58(3)(a) of the Courts and Legal Services Act 1990 (as amended).”

This was clearly a material breach and he said that, while he reached the conclusion “reluctantly and with regret”, he found that “the claimant’s costs are claimed in breach of the indemnity principle”.

Deputy Master Friston went on to say that although the court could find an agreement void for uncertainty because it was “so prolix and convoluted as to defy comprehension”, this was a high hurdle that was not reached here. He stated that although it was undoubtedly true that the solicitors had created “a contractual quagmire” in which even they lost their way, it was necessary to distinguish between “conceptual uncertainty” (where the court is effectively asked to write the terms of the contract for the parties) and “uncertainty arising out of inconsistent or ambiguous terms” (where the court is asked merely to determine the meaning of the words used). In his view, the uncertainties in the third agreement fell into the category of uncertainty arising out of inconsistent or ambiguous terms.

Likening the retainer documentation to a hydra, he had no doubt that there were “dozens, if not scores” of ambiguous and inconsistent terms “that would take days to disentangle”:

“That may be so, but Mr Hogan [for the defendant] has not been able to direct me to any aspect of the Third Agreement where the court’s duty to interpret the documentation would be ‘legally or practicably impossible. In view of this, I am unable to find that the Third Agreement is void for uncertainty.”

The judge also rejected the submission that the CFA fell foul of O(1.6) of the SRA Code of Conduct 2011 by not being a fee agreement which the solicitors considered “suitable for the client’s needs”.

While all three CFAs were “not just unsuitable for the claimant’s needs, but entirely unsuitable”, he said that the solicitors had to have actual knowledge of this to be in breach:

“Here, the claimant (or, in reality, Mr Johansson) escapes by the skin of his teeth… I find that at the time that Mr Johansson drafted the retainer documentation, he genuinely (albeit entirely unreasonably) believed them to be suitable for the claimant’s needs.”

However, he found that the original bill of costs was miscertified and that this should have been obvious to the solicitor responsible for conduct of the case. This was improper and unreasonable, as were the failure to try and rectify the miscertification and attempts to deflect the defendant’s enquiries. Not disclosing the retainer documentation was unreasonable.

Master Friston imposed a 25% reduction of the claimant’s profit costs, while acknowledging that “this sanction is likely to be of little practical effect” given the earlier finding that the CFA was unenforceable.

The message is clear. It is still imperative that practitioners enter into valid enforceable retainers with clients whilst the indemnity principle still exists. Indeed, any costs lawyer will tell you that the first thing we look for on the file is the retainer. Make sure the retainer covers all the work you do for the client. Review the retainer regularly and make sure it is carefully explained to the client.

Paul Bracewell is a costs lawyer, a council member of the Association of Costs Lawyers, and accredited civil and commercial mediator with Bracewell Costs.

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