Bray Walker Solicitors (a firm) & Anor v Silvera

A conditional fee agreement is enforceable where it substantially complies with the regulatory requirements. Compliance is assessed by the terms of the applicable regulations, not by whether the client suffered loss or prejudice. The agreement must give reasons specific to the success-fee percentage adopted, but need not set out a detailed risk assessment unless the regulations require it. A solicitor must explain orally the circumstances in which costs may become payable, while the regulations do not require every possible settlement scenario to be explored. The inquiry into existing insurance or alternative funding must be proportionate to the circumstances. Where there is no reasonable basis to suspect existing cover, limited inquiry may suffice.

The claimants sought recovery of basic fees under conditional fee agreements made with the defendant in 2003 and 2005. The defendant challenged enforceability under the Conditional Fee Agreement Regulations 2000 and alleged breaches of the retainer.

He contended that the agreements failed to explain the 75 per cent success fee, failed to provide adequate oral explanations, and did not sufficiently investigate insurance or other funding. He also alleged that transferring the retainer from the first claimant to the second claimant repudiated the contract, and that the agreements were terminated contrary to a later variation.

The central issues were whether the agreements complied with the statutory and regulatory requirements and whether the claimants were otherwise entitled to recover their basic fees.

1. Outcome. Judgment was entered for the claimants for recovery of their basic fees. The defendant failed to establish that the conditional fee agreements were unenforceable or that the retainer had been breached.
2. Under section 58 of the Courts and Legal Services Act 1990, as amended by section 27 of the Access to Justice Act 1999, a conditional fee agreement must comply with prescribed requirements. The principles in Hollins v Russell [2003] EWCA Civ 718 required substantial compliance, and actual loss or prejudice was unnecessary.
3. Regulation 3 required reasons specific to the percentage success fee stated in the agreement. The agreements identified deferment, the risk of losing, the funding of disbursements and the risks of the particular litigation. Detailed disclosure of the underlying risk assessment was good practice, but was not a precondition of enforceability under the regulation.
4. The written agreements, together with the oral explanations given at the meeting, adequately explained the circumstances in which the defendant might become liable for basic fees, disbursements and a success fee. Regulation 4 did not require the solicitors to explain every hypothetical combination of offers made in respect of different heads of claim.
5. The duty concerning insurance and alternative funding was context-sensitive. The solicitors made sufficient inquiry about existing and after-the-event insurance. Given the nature of the claim and the absence of any reason to suspect pre-existing cover, more extensive investigation was unnecessary. The approach was consistent with the observation in Garrett v Halton Borough Council [2006] EWCA Civ 1027 that the nature of the claim may justify fewer inquiries.
6. The transfer to the second claimant was agreed and implemented by novation. It did not terminate the retainer or deprive the first claimant of its entitlement to fees for work done before the transfer. The communications before termination did not amount to an accepted variation requiring the claimants to await a second opinion.

Not stated in the judgment. This was a first-instance decision of the High Court.