Butler v Bankside Commercial Ltd

A conditional fee agreement permitting solicitors to end the retainer if the client rejects their opinion about making a settlement is not confined to advice to accept an existing offer. In its ordinary meaning, it includes advice that the client should make an offer calculated to achieve a settlement.

Clear contractual language should be given that meaning even if the resulting liability is greater than the client expected. The fact that solicitors bear economic risk under a conditional fee agreement supports a construction that protects them from a client’s unreasonable refusal to pursue settlement negotiations.

The appellant retained the respondent solicitors under a Law Society-form conditional fee agreement in relation to a damages claim arising from the termination of a commercial agency. The agreement entitled the solicitors to terminate in specified circumstances if the client rejected their opinion about making a settlement.

After the opponent made a settlement offer, the solicitors advised the appellant to make a counter-offer. She gave no response to that advice or to a later request for final instructions. The solicitors terminated the retainer. The appellant continued with other solicitors and later obtained an arbitration award.

Master Yoxall entered summary judgment for the solicitors’ outstanding charges. Turner J dismissed the appellant’s appeal: [2019] EWHC 510 (QB); [2019] 1 Costs LR 169. The central issue was whether the termination provision covered advice to make a settlement offer, rather than only advice to accept an offer already made.

1. Appeal dismissed. The clause covered the solicitors’ advice that the client should make a counter-offer. The appellant’s failure to respond amounted to rejection of that opinion, so the solicitors were entitled to terminate under the agreement.

2. The wording was not limited to an opinion that the client should accept an existing offer. Had that been intended, the clause could have said so. Other parts of the agreement expressly addressed refusal of a Part 36 offer, whereas advice about making a settlement used wider language. In ordinary English, it included advice to make an offer designed to lead to settlement.

3. The commercial context reinforced that construction. A settlement is the end point of a process, and solicitors acting under a CFA bear economic risk if a client unreasonably insists on pursuing the claim. Their contractual protection should not depend on the chance that the opponent has made an offer capable of acceptance. The incorporated terms also showed that the no-win-no-fee principle was qualified: on termination under this clause, basic charges and disbursements were payable irrespective of the eventual result, with a success fee payable if the client won.

4. There was no ambiguity requiring a construction favourable to the client. The court did not need to define the outer limits of advice about making a settlement. On the facts, the solicitors’ letters clearly stated their opinion, it concerned making a settlement, and the appellant rejected it.

5. Lewison LJ adopted and affirmed the judge’s reasons, applying the appellate approach described in [2013] EWCA Civ 916. David Richards LJ and Rose LJ agreed.

• Court of Appeal (Civil Division): dismissed the appellant’s appeal and affirmed Turner J’s construction of the conditional fee agreement: [2020] EWCA Civ 203.

• High Court, Queen’s Bench Division: Turner J dismissed the appellant’s appeal from Master Yoxall’s summary judgment for the solicitors: [2019] EWHC 510 (QB); [2019] 1 Costs LR 169.