TAKING A CUT? Reflections On Belsner V Cam Legal Services Ltd

• Published date: 25 October 2020
• Subject Matter: Litigation, Mediation & Arbitration, Court Procedure, Trials & Appeals & Compensation, Personal Injury
• Law Firm: 4 New Square Chambers
• Author: Mr Benjamin Williams QC and Robert Marven QC

Mr Justice Lavender's recent decision in Belsner v Cam Legal Services Ltd [2020] EWHC 2755 (QB) is the latest blow to solicitors representing claimants in the volume personal injury market. Already under siege from lawyers representing former claimants demanding refunds on allegedly excessive success fees, in Belsner Lavender J held that the effect of s 74(3) of the Solicitors Act 1974 ('s 74(3)'/'SA 1974') was that no deductions at all could be made from the client's damages, even though the client had entered a retainer which expressly authorised that. This contractual provision, the judge held, did not give the 'informed consent' which he held was required under CPR 46.9(2) in order to disapply s 74(3).

The judge's ruling that costs cannot be deducted out of damages, even in the face of an express contractual authorisation, is potentially devastating to some sections of the personal injury market. Since the Jackson reforms abolished recoverable success fees and introduced very limited fixed inter partes costs for most fast track level claims, the ability to deduct at least part of the unrecovered costs from damages has become essential. In this short note, however, we argue that there are grounds for distinguishing Belsner in the very large number of cases where PI solicitors have placed a contractual cap on the amounts they can deduct from compensation. We also suggest that some important and potentially decisive issues were not explored in the Belsner case.

The Facts of Belsner

Belsner arose from a detailed assessment of a solicitor's bill on the application of their former client the claimant. The solicitors had acted for the claimant in her claim arising from a road traffic accident when she was knocked off the motorcycle on which she was a pillion passenger. The solicitors' CFA retainer documents had set out the claimant's liability for basic charges, success fee and disbursements; and (broadly speaking) indicated that her liability could be expected to exceed inter partes recovery. Significantly, however, the CFA did not provide any overall cap on the amount of costs payable by the claimant to the solicitors. Many solicitors of course do do this, caps on deductions of around 25% being common in the market.

The claimant's claim settled within stage 2 of the so-called portal process (formally, the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents) for '1,916.98. The solicitors deducted (only) '385.50 for their costs from these damages, but the terms of the CFA...