Mohamed v Alaga & Co

A court will not enforce a fee-sharing agreement which a solicitor is prohibited by delegated professional rules from making. Although the prohibition is expressed as a duty of the solicitor, enforcement against the solicitor would defeat the public interest protected by the rules.

That conclusion does not necessarily bar a quantum meruit claim for a reasonable payment for distinct professional services. Such a claim must not re-create the prohibited reward for introductions or a share of the solicitor’s fees. It may be pursued where the claimant seeks payment for work actually done and may be significantly less culpable than the solicitor.

The claimant alleged an oral agreement under which he would introduce Somali clients to the defendant solicitors, assist with interpretation and related work, and receive one half of the legal-aid fees received by the firm. He also claimed reasonable remuneration for services rendered and later sought to add a negligence claim.

Master Bragge determined a preliminary issue in the claimant’s favour. On appeal, Lightman J struck out the contractual claim, rejected restitution, and dismissed the action. The claimant appealed to the Court of Appeal.

The central questions were whether the alleged fee-sharing agreement was illegal and unenforceable and, if so, whether the claimant could nevertheless recover reasonable remuneration for separate professional services.

1. Appeal allowed in part. The Lord Chief Justice, with whom Lord Justice Otton and Lord Justice Robert Walker agreed, held that the alleged agreement to pay the claimant half of the solicitors’ legal-aid fees was illegal and unenforceable.

   Section 31 of the Solicitors Act 1974 empowered the Law Society, with the Master of the Rolls’ concurrence, to make subordinate legislation governing solicitors’ professional conduct. Rule 7 of the Solicitors Practice Rules prohibited solicitors from sharing or agreeing to share professional fees. Rule 3 and the Solicitors’ Introduction and Referral Code also prohibited rewarding introducers by commission. Although the rules imposed professional obligations on solicitors, their observance prevented the making of the agreement. Judicial enforcement would defeat the public interest which the rules protected.

2. The claim for 50% of the legal-aid fees was therefore struck out. The court applied the distinction in St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 267: Rule 7 prohibited both the payment and the contract to make it. The claimant’s assumed ignorance of the prohibition could not validate the agreement.

3. The claimant could, however, pursue a quantum meruit claim for reasonable remuneration for interpreting, translating, letter-writing and other professional services actually rendered. That claim was distinct from an attempt to recover the prohibited half-share of fees. The claimant might establish that he was unaware of the rules and materially less culpable than the defendant solicitors. The claim was distinguishable from Taylor v Bhail [1996] CLC 377, where both parties were implicated in an illegal fraud and the claimant had to rely on the illegal agreement.

4. Lord Justice Robert Walker added that payment for genuine services could be a proper disbursement rather than payment for introductions or a share of the solicitors’ profit costs. The court also granted leave to plead a negligence claim, without deciding its merits, so that the defendant could advance its legal objections at trial.

• Court of Appeal (Civil Division) — in [1999] EWCA Civ 3037, allowed the appeal in part. The contractual fee-sharing claim remained struck out, but the quantum meruit claim was restored and leave to plead negligence was granted.
• High Court, Chancery Division — Lightman J, on 25 March 1998, allowed the defendant’s appeal from the master, held the contract illegal and unenforceable, rejected restitution, struck out the statement of claim and dismissed the action.
• Master — Master Bragge, on 4 November 1997, determined the preliminary issue concerning Rule 7 in the claimant’s favour.