Bolt Burdon Solicitors v Tariq & Ors

A contingency fee agreement for non-contentious business may lawfully provide for remuneration by a percentage of compensation. Its proper construction depends on the words used and the relevant factual background. Unless the agreement requires otherwise, entitlement may be triggered by an offer accepted during its currency, without proof that the solicitor was the effective cause of the offer. Gross compensation remains the relevant figure where the agreement refers to the total financial value of sums offered, even if tax is deducted at source. Under Solicitors Act 1974, section 57, fairness concerns the manner in which the agreement was obtained, while reasonableness concerns its terms. The agreement was neither unfair nor unreasonable on the facts.

Bolt Burdon Solicitors claimed professional fees under a 50 per cent contingency fee agreement with the defendants concerning compensation for the mis-selling of an interest rate swap by Allied Irish Bank. The Bank ultimately offered substantial redress under its review scheme.

The defendants disputed construction of the agreement, contended that the solicitors had made actionable misrepresentations about limitation and the finality of the review process, and sought relief under section 57 of the Solicitors Act 1974 on the ground that the agreement was unfair or unreasonable. The central questions concerned the fee-triggering event, whether compensation was calculated gross or net of tax, liability for disbursements, misrepresentation, and statutory relief.

1. Construction. The agreement defined compensation broadly as the total financial value of sums, concessions or benefits offered by the Bank and accepted by the defendants. Clauses 1.5, 1.10, 5, 6 and 7 showed that the fee was 50 per cent of compensation plus VAT, with disbursements and expenses separately recoverable. The contingency was the objective fact of an offer accepted during the agreement, not the solicitor’s being its effective cause. No such term could properly be implied, and an effective-cause requirement would create serious difficulties of proof and interpretation.
2. The March and August offers were not to be treated as separate for fee purposes. In any event, the work performed after execution of the agreement, including the data subject access request and pressure applied to the Bank, was an effective cause of the March offer. Work performed before execution could not retrospectively become work under the agreement.
3. Gross compensation. The fee was calculated on the gross interest sum. Tax deducted at source was merely a method of collection and did not alter the total financial value of the compensation under clause 1.4.
4. Misrepresentation. The advice on limitation was an honestly and reasonably held opinion about legal difficulties, not an actionable false representation of fact. The advice about the absence of a formal appeal process and the likely finality of the initial outcome was accurate, or in any event an honestly held opinion. Reliance and loss would also have presented insuperable difficulties.
5. Section 57. A percentage-based contingency fee for non-contentious business is lawful. Fairness concerns how the agreement was obtained; reasonableness concerns the substance of its terms. The defendants understood the agreement, had time to consider it, received an accurate assessment of the risks, and deliberately accepted a risk-free arrangement in return for sharing the recovery. The fee was not unreasonable merely because it substantially exceeded the solicitors’ time costs, since the solicitors bore the risk of receiving nothing.
6. The claim succeeded for the full sum claimed. The defendants’ counterclaim was dismissed. Payment was ordered by 4 pm on 4 May 2016.