Hollins v Russell

A conditional fee agreement is not rendered unenforceable by every technical departure from a requirement made under section 58 of the Courts and Legal Services Act 1990. The court must ask whether the departure, alone or cumulatively, had a materially adverse effect on client protection or the proper administration of justice.

In costs proceedings, a receiving party relying on a conditional fee agreement should normally be required to elect between disclosing it to the paying party and proving entitlement by other evidence. Attendance notes are not ordinarily disclosed unless a genuine issue of compliance arises. A solicitor may delegate regulatory information duties, including through an agent, but retains responsibility for suitable supervision and for the quality of performance.

Hollins v Russell was one of six conjoined appeals concerning conditional fee agreements made after the April 2000 funding reforms. The appeals raised disclosure, enforceability, and alleged breaches of the Conditional Fee Agreements Regulations 2000.

In Hollins, Judge Tetlow had held that the claimant's agreement failed to comply with regulation 2(1)(d), because it did not expressly state that basic charges and disbursements were not capped by damages. The claimant appealed. The central issue was whether that drafting departure made the agreement unenforceable under section 58 of the Courts and Legal Services Act 1990.

1. The claimant's appeal in Hollins was allowed. The order of Judge Tetlow was set aside and the order of District Judge Simpson restored.
2. Section 58 requires sufficient, rather than minute and literal, compliance with applicable conditions. The question is whether a departure from a statutory or regulatory requirement had a materially adverse effect on the protection afforded to the client or on the proper administration of justice. An immaterial departure does not make the agreement unenforceable. The same approach applies to requirements in section 58 and to those prescribed by regulations.
3. Regulation 2(1)(d) required the agreement to specify whether payable amounts were limited by damages. The April 2000 model agreement used in Hollins expressly addressed the success fee but not basic charges and disbursements. Read as a whole, however, it made sufficiently clear that the client remained liable for all those sums, subject to recovery from the opponent. The omission had no material adverse effect. A less clear agreement, which a lay client could not reasonably understand, could produce a different result.
4. For costs proceedings generally, the court distinguished Bailey v IBC Vehicles Ltd [1998] 3 All ER 570. Where a conditional fee agreement is relied upon, the costs judge should normally put the receiving party to the election recognised in Pamplin v Express Newspapers Ltd [1985] 1 WLR 689: disclose the agreement or prove entitlement in another way. Attendance notes should be required only where a genuine compliance issue is raised.
5. In the conjoined appeals, the court also held that regulation 4 information could in principle be given by a properly appointed agent rather than a qualified solicitor. The solicitor nevertheless remained professionally responsible for appropriate delegation, supervision and the adequate performance of the duties.
6. Obiter, an unenforceable agreement does not necessarily prevent recovery of an after-the-event insurance premium or disbursements actually paid or funded by the client, if otherwise recoverable as costs.

• Court of Appeal (Civil Division). In the joint judgment, [2003] EWCA Civ 718, the court allowed Hollins's appeal and restored the order of District Judge Simpson.
• Oldham County Court. Judge Tetlow had held that the conditional fee agreement failed to comply with regulation 2(1)(d) of the Conditional Fee Agreements Regulations 2000 and was unenforceable.