“The benefit and the burden”

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25 August 2016

Posted by Sian Brookes, solicitor liaison officer at Legal Futures Associate Allianz Legal Protection

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Brookes: sanity seems to have prevailed

In what seems to have been an unstoppable train of decisions, rules and consultations making the life of claimant firms increasingly challenging, it made a welcome change to read the recent circuit judge ruling in Jones v Spire Healthcare.

Holding that a pre-LASPO conditional free agreement (CFA) had been validly assigned from a dissolved firm across the 1 April 2013 frontier, HHJ Wood QC not only confirmed the principle derived from Jenkins v Young Brothers Transport Ltd [2006] 1 WLR 3189 that the benefit and the burden of a CFA can be assigned where there is an element of personal service involved – i.e. where a client has chosen to follow a specific fee-earner – but went further to suggest the principle is not restricted to this situation.

He stated that “it would be very difficult to identify those cases where a particular client had been insistent on the continuity of a specific fee-earner”.

The cost implications of this are of huge importance to many firms that have taken over books of personal injury work. The knock-on effect of a decision to the contrary would have jeopardised a firm’s ability to not only recover the success fee, but also their costs as the CFA could be unenforceable due to failure to comply with the post-LASPO statutory requirements.

In that scenario, it seems that firms would have been unfairly penalised and lost out on considerable amounts of already incurred and future work in progress.

In a market where there is already a demonstrable squeeze on profitability, I can’t help but wonder if it may have been the final straw for some firms where there have been large transfers of claims. However, thankfully, sanity seems to have prevailed.

Of even more significance would have been the impact on individuals. Whilst they would have been able to receive the benefit of qualified one-way cost shifting and a Simmons v Castle uplift on damages, they would not have been able to obtain an after-the-event (ATE) insurance policy that would have been recoverable from the defendant. The impact of this would have been most acutely felt on a claim that was post issue, or a complex multi-track matter, where the cost of a policy is higher to reflect the risk.

In light of all of this, there may be questions as to what happens to an associated pre-LASPO ATE policy. Our technical claims deputy team leader, Matt Winter, explains: “Under the terms of the policy, there is no automatic right of transfer; we have the right to end the policyholder’s cover if they change their legal representative and the insurance ends once the CFA has been terminated.

“However, where the change of solicitor is not simply down to client choice and the CFA can be, and has been, validly assigned to another panel firm, we are likely to agree to transfer the policy.”

Our stance is broadly in line with the Jones decision and in light of the fact that it has now been confirmed that there will be no further appeals, it would seem likely that we will continue to deal with our policyholders as fairly as possible in line with the above guidance. I would, of course, urge any of our solicitors to contact us as soon as they become aware of any issues with transferring a policy to ensure you are able to provide the best advice to clients.

Of course, this is unlikely to be the end of the matter.  There remains the ambiguity as to whether there is sufficient clarity to know if future interpretations of CFA assignments of this nature will be narrowly construed so as to apply only from a dissolved firm or more widely to CFAs in general.

Whilst there is no doubt the external environment remains challenging, to say the least, amongst those law firms I see on a weekly basis, the ability to adapt to relentless changes and continue to thrive remains a constant.

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October 21st, 2016