Costs post Jackson – Can a Conditional Fee Agreement be Assigned?
Published 13 May 2016
The arena of personal injury law has seen consolidation of the Claimants' solicitors' market as firms have been acquired, firms have closed their personal injury teams and some firms have gone into liquidation. A consequence of this activity has been the transfer of personal injury claims from one firm to another.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012 provides that success fees are not recoverable from Defendants on conditional fee agreements entered after 31 March 2013, but what is the position where the CFA was entered prior to 31 March 2013 and the claim is transferred to a new firm after that date? His Honour Judge Graham Wood QC handed down his judgment on this question on 11 May 2016, in the appeals in the case of Denise Jones v Spire Healthcare Limited.
The Claimant was injured in an accident at work in 2011 and entered a CFA with her old firm, Barnetts, on 1 February 2012 which provided for a success fee. Barnetts went into administration and her new firm, SGI Legal LLP, acquired its personal injury portfolio for an unspecified price in January 2014. A deed of assignment transferred the rights and responsibilities (i.e. the benefits and burdens) of the CFAs (i.e. the retainers) from the former to the latter. The Claimant also signed a separate deed of assignment in respect of her CFA.
At first instance, the District Judge found that the benefit of the retainer inherent in the CFA was validly assigned but the burden had not been. As a result, whilst the Claimant (and SGI) was entitled to recover the costs incurred on her behalf by Barnetts, she was not entitled to recover the costs incurred on her behalf by SGI in the absence of a valid retainer. The Claimant appealed in respect of the disallowance of the post-assignment costs and the Defendant appealed in respect of the allowance of the pre-assignment costs.
The Claimant's appeal was allowed and the Defendant's cross appeal was dismissed. Whilst the District Judge had based his decision on the circumstances of the case because a retainer between solicitor and client is a contract for personal services (…the fee earner handling the claim at Barnetts had not continued to handle the claim at SGI despite moving there, so the Claimant had not followed him), His Honour Judge Wood QC was reluctant to do so as the submissions focused on principles for general application and the need for a qualitative assessment of the solicitor/client relationship in each case would lead to considerable satellite litigation. He was also influenced by the practical implications of a CFA not being capable of assignment. In allowing the Claimant's appeal, he noted that the Claimant had agreed to the assignment when she was not obliged to do so before going on to hold, as a matter of law, that the burden of a CFA is capable of assignment.
As a result of this judgment, which the Defendant has not yet decided whether to appeal, the Claimant is able to recover the costs incurred by SGI on her behalf, including the success fee, and many other Claimants will be entitled to recover the costs incurred on their behalf by firms who acquire their claims without entering new CFAs.