Flaux: Clear and obvious errors of principle
The High Court has struck off a solicitor who instituted a practice of “gross overcharging” in clinical negligence cases so as to maximise profits.
It overturned a Solicitors Disciplinary Tribunal (SDT) ruling [1] that Andrew Mark Cyril Good should only be fined £30,000.
His firm, Hull-based Rapid Response Solicitors, had a standard approach of setting charge-out rates in its conditional fee agreements of £400 an hour – even for unqualified staff – with a 100% success fee.
The SDT found that the bills were designed “simply to maximise profits which he was the direct beneficiary of receiving”.
However, the tribunal did not find his conduct dishonest, because Mr Good “believed that he was entitled to ‘test the rate’, and that the bills would be subject to the scrutiny of the courts/costs experts”.
On appeal by the Solicitors Regulation Authority, the Divisional Court ruled [2] that the SDT has misapplied both stages of the Ivey test on what constituted dishonesty.
Giving the ruling, Lord Justice Flaux identified five “clear and obvious errors of principle”, particularly in the way the SDT “simply overlooked” the serious findings of knowledge and deliberate misconduct which it had made.
Nowhere in its analysis did the SDT say that Mr Good’s belief that he was entitled to charge these rates was genuine, he ruled.
“That important element of the analysis is simply missing and, on that ground alone, the SDT’s evaluation is fundamentally flawed.”
Even if Mr Good’s belief was genuine, it was “difficult to see how that could exonerate him from a finding of dishonesty in the light of the findings of fact as to his knowledge and deliberate misconduct”.
The SDT finding that Mr Good had set the rate at an artificially high level in the knowledge that the clients would not object, was also “wholly inconsistent with any belief that he was entitled to set such an artificially high rate being genuine”.
The fact that the amounts of the bills were never in fact recovered on detailed assessment and that Mr Good later reduced the rates did not, as the SDT contended, show that his conduct was not dishonest.
“Those were essentially matters of mitigation and the SDT has missed the point, no doubt because it failed to return to its serious findings of knowledge and deliberate misconduct, in evaluating whether Mr Good was dishonest.
“In the light of those clear and unequivocal findings, the only proper conclusion would have been that, in rendering the bills which he knew to be excessive or grossly excessive and artificially high, Mr Good was dishonest in the first place.
“Whilst the fact that the firm never actually recovered excessive costs and the other matters to which the SDT refers may mitigate the gravity of that dishonesty, they cannot eradicate it.”
The fact that the bills could be challenged was not a “guaranteed protection” against the firm recovering the costs, Flaux LJ said, and the SDT did not consider “why on earth Mr Good went to all the trouble to institute this policy and bill these artificially high rates, unless it was in the hope that the paying parties would, on occasion, pay the bill without questioning it”.
The SDT’s “bald assertion” that members of the public would not find Mr Good’s conduct dishonest “cries out for further explanation or elaboration”, the judge added.
Flaux LJ said there was no reason to remit the case to the tribunal. “Since no exceptional circumstances are advanced which would justify a lesser sanction, given that finding of dishonesty, the only appropriate sanction is striking off the roll.”
He added that, even if he had not found Mr Good to be dishonest, he would have upheld the other limb of the appeal, namely that the sanction of a £30,000 fine was excessively lenient.
He would have found the fine to be “clearly inappropriate so that the court should intervene and quash that sanction, substituting the sanction of striking off the roll”.
The judge said it was “of paramount importance that the public and other members of the profession are able to have complete trust in a solicitor when it comes to statements or bills of costs”.
He continued: “Were it otherwise, there would always be a risk that the paying party on a bill, relying on the integrity of the solicitor rendering the bill, would settle a bill which was in fact excessive or grossly excessive, to the knowledge of the solicitor rendering the bill.
“Contrary to what the SDT appears to have thought, I consider that risk was always present in these cases.
“The serious lack of integrity demonstrated by Mr Good in relation to the bills of costs he rendered completely undermined any such trust.”