CFA - SUCCESSFUL TERMINATION

In Butler v Bankside Commercial Ltd [2019] EWHC 510 QB, on Appeal, Turner J upheld the decision of the Court below that the Respondent firm of Solicitors was entitled to be paid costs incurred under the auspices of a CFA. They had sought to terminate that agreement due to their client not accepting their advice about “making a settlement with your opponent”.

The Judge drew a distinction between CFA cases and other types of retainer, because where there was a CFA, the Solicitors shared risks of an adverse result at trial. The ability therefore to escape the agreement if the advice was not accepted was an important element of protection for the Solicitors’ legitimate interests. In the absence of a CFA, a client has the privilege of ignoring such advice without such consequences.

The case boiled down to a question of interpretation of the phrase within the Law Society’s Model Agreement at clause 7 (b) (iii) as underlined below:

"(b) Paying us if we end this agreement

…(iii) We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:

• Pay the basic charges and our disbursements, including barrister's fees;

• Pay the success fee if you go on to win your claim for damages."

The Appellant argued that advice about making an offer is not the same as advice about “making a settlement”. She argued that settlement is an active process which refers to actually settling a case usually by accepting an offer from the opponent. Simply making an offer did not equate to “making a settlement” because the making of an offer does not mean that the case settles.

In the underlying claim, the Appellant had received an offer of settlement from the opponent which had not proved to be acceptable. An arbitration hearing was approaching and the Respondent here provided strong and detailed advice that a counteroffer should be made. The Appellant did not accept that advice. The retainer was therefore terminated.

The Appellant went on to the Arbitration and recovered a lower figure than had been recommended together with some element of adverse costs to the opponent. (The relevance of the lower award here being that it could no longer be cogently argued that the Respondent had been attempting to persuade the Appellant to settle at an undervalue simply to ensure that the matter settled on terms which will be most beneficial to the Solicitors in terms of recovery of their costs).

The Respondent was claiming the costs as assessed at the Arbitration. The proceedings in the High Court therefore were simply as to whether the Appellant had any liability to pay any sum at all to the Respondent under the terms of the CFA. There was no issue on quantum of those costs.

Turner J found that on a true construction of the clause, a Solicitor’s opinion about making an offer is perfectly capable of being one which is about “making a settlement”. He commented that a settlement is an endpoint, but the making of one is a process.

He added that the suggestion that “making a settlement” should be construed as being limited to the consideration of the acceptance of any offers made by the opponent was inconsistent with the language of the clause and would lead to a lack of coherence both procedurally and logically.

The Judge concluded that such an interpretation did not diminish the protection for clients due to other avenues of potential difficulties for Solicitors who attempted to abuse the system to include reputational damage and the risk of being sued for negligence.

This case is therefore one of some comfort for practitioners seeking to avoid having to continue to act in a case in which the prospects of success (or of beating an offer) give them course for considerable concern in relation to costs.

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