In preparation for the upcoming appeal in Belsner v CAM Legal Services, listed for a two-day hearing at the Court of Appeal (commencing on 11 July 2022), checkmylegalfees.com and JG Solicitors Ltd have jointly analysed 925 solicitor-client retainers secured by 249 firms, between 2013 and 2021. An article published in the Law Society Gazette disclosed that the costs recovery outfits had found evidence of ‘vastly over-inflated costs’ being charged.[i]
The underlying claim in Belsner regarded a low-value personal injury action, which settled (£1,916.98) at Stage 2 of the pre-action protocol for road traffic accident (RTA) claims, before formal proceedings were issued. When the injured party was served with a statute bill from its solicitors (£4,406.07), it was agreed that her liability would be limited to fixed costs and disbursements that had been recouped from her opponent’s insurers (£1,783.19), plus a success fee (£385.50) of 100% of basic charges (£2,171.90 excl. VAT), capped at of 25% of general damages.
However, the terms of the conditional fee agreement (CFA) did not specify an overall cap on the figure that the solicitors could recover from her, meaning that she could technically have been charged the remaining £2,522.88 (£4,406.07−£1,783.19). Had the solicitors elected to make such a demand, she would have been left £605.90 out of pocket (£2,522.88−£1,916.98), with her compensation effectively extinguished.
Crucially, the Client Care Letter contained an estimate of basic charges at £2,500.00 (excl. VAT), but failed to divulge that she might only recover £500 (excl. VAT) in fixed costs from her opponent – a failing which might have led her to question whether her global liability could be capped, or to approach a different firm of solicitors and broker a more competitive funding arrangement.
The ongoing dispute in the Belsner test case therefore challenges payment of the £385.50 success fee, on the basis that ‘informed consent’ was not given and that the solicitors’ deduction from the client’s damages was unlawful.
At least 900 stayed claims, run by checkmylegalfees.com, are awaiting a decision in Belsner, but the total number of personal injury cases (from the past decade) implicated by the outcome could be in the hundreds of thousands or even millions.
Research into the 925 retainers, the majority of which were CFAs that made the client liable for ‘any balance of unrecovered costs’, forms part of a witness statement that will be presented to the Court of Appeal this summer.
This will show that the average hourly rate over the past eight years for Grade D fee earners was around £327, which is more than double the current guideline hourly rate outside of London. Some firms have been charging as much as £540.
Checkmylegalfees.com founder, Mark Carlisle, is of the opinion that retained clients would not have agreed to being charged these rates if they had been better informed of the ramifications:
‘The higher the rates, the higher the likelihood that there will be a significant difference between the solicitor’s bill and the recovered costs, with the shortfall between the two - subject to any contractual cap set by the solicitor - being deductible from any compensation or damages obtained for the client’.
Conversely, claimant personal injury firms insist that retained clients gave their ‘informed consent’ to deductions and that costs were proportionate at all times.
From Autumn of 2022, the percentage of actions resulting in a shortfall between the solicitor’s bill and the recovered costs is forecasted to rise, with fixed costs scheduled to be extended to claims up to the value of £100,000.
The importance of Belsner cannot be underestimated for this exact reason.[ii]
[i] John Hyde, ‘Grade D fee earners “charging more than £500”’ (20 April 2022 Law Gazette) <https://www.lawgazette.co.uk/news/grade-d-fee-earners-charging-more-than-500/5112236.article> accessed 5 May 2022.
[ii] Rachel Rothwell, ‘As fixed costs expand we need answers’ (11 March 2022 Law Gazette) <https://www.lawgazette.co.uk/commentary-and-opinion/as-fixed-costs-expand-we-need-answers/5111906.article> accessed 5 May 2022.