Westlaw Services Ltd & Anor v Boddy & Anor

An agreement which directly shares a solicitor’s professional fees in breach of Solicitors’ Practice Rules 1990, Rule 7(1), is unlawful, void and unenforceable. The Rules have the force of subordinate legislation and protect the public by safeguarding a solicitor’s independence and integrity.

A subsequent relaxation of the Rules does not validate an earlier arrangement. A profit-sharing arrangement between principals does not fall within the bona fide employee exception merely because the non-solicitor worked under the solicitor’s direction. Although reasonable remuneration for services may in principle be recoverable independently of an unlawful fee-sharing agreement, an appellate court may refuse a late amendment where the claim was abandoned below and raises substantial issues of public policy, limitation and assignment.

Westlaw, as assignee of Kush Verma, and Mr Khan claimed payments from the estate of a deceased solicitor. They alleged that the solicitor had agreed to pay them percentages of Legal Services Commission fees received for criminal work in which they assisted.

A High Court judge struck out Westlaw’s claim and dismissed Mr Khan’s claim. He held that the arrangements unlawfully shared professional fees contrary to Rule 7(1) of the Solicitors’ Practice Rules 1990. The appellants challenged that conclusion. Mr Khan also relied on the bona fide employee exception and sought to adduce further evidence. Both appellants sought to advance, or revive, claims for reasonable remuneration.

1. Appeals dismissed. The alleged arrangements directly required the solicitor to share professional fees with non-solicitors. They were therefore unlawful, void and unenforceable under Rule 7(1) of the Solicitors’ Practice Rules 1990.

2. The Rules had the force of subordinate legislation made under section 31 of the Solicitors Act 1974. The contrary statement in Thai Trading was incorrect. The Court followed Mohammed v Alaga & Co, [1999] EWCA Civ 3037, as binding authority that a fee-sharing arrangement prohibited by Rule 7 is not merely unlawful but void and unenforceable.

3. This was not an incidental regulatory breach. Rule 7(1) directly prohibited the agreed payment mechanism. Its purpose was to preserve solicitors’ independence and integrity by preventing non-solicitors with a financial stake in fees from exerting actual or perceived pressure on professional judgment. The later introduction of Rule 7(1A) did not alter the law or policy applicable when the arrangements were made.

4. Mr Khan was not a bona fide employee within Rule 7(1)(c). The essential reality was a profit-sharing arrangement between principals. He was engaged to build and run the Crown Court work, introduced clients, received no salary or wage, bore expenses pending receipt of fees, and regarded himself as self-employed.

5. The Court declined to admit further evidence. Under CPR 52.11(2), the principles in Ladd v Marshall remained relevant although not automatically decisive. The evidence was available below, Mr Khan had competent representation, and the material did not undermine the conclusion that he had no real prospect of establishing employee status.

6. The Court also refused permission to introduce or restore claims for reasonable remuneration. Such a claim may in principle be available independently of an unlawful fee-sharing agreement, but these proposed claims had not been advanced below or had been abandoned. They raised unresolved public-policy and limitation issues. Further, Westlaw’s assignment transferred rights arising from the unlawful express contract only; it did not assign any separate reasonable-remuneration claim, which remained vested in Mr Verma. Any such claim would have to be pursued in fresh proceedings.

• Court of Appeal (Civil Division): dismissed Westlaw’s and Mr Khan’s appeals.
• High Court of Justice, Queen’s Bench Division, Leeds District Registry: on 22 June 2009, Judge Langan QC struck out Westlaw’s claim and dismissed Mr Khan’s claim on the basis that the alleged fee-sharing agreements contravened Rule 7(1) of the Solicitors’ Practice Rules 1990.