Motorbike accident: Client had LEI cover
The Senior Costs Judge has disallowed a law firm’s £30,000 success fee in a personal injury claim because it failed to make reasonable enquiries as to the existence of legal expenses insurance (LEI).
Judge Jason Rowley held that the “desultory enquiries” Fletchers made of its client’s home insurer, Zurich, and failure to approach the LEI provider behind it, DAS, “cannot be said to be making any form of reasonable enquiry”.
Peter Evans instructed Fletchers in 2017 after a motorcycle accident. He signed a conditional fee agreement (CFA) and confirmed he had family legal expenses insurance taken out as part of his home insurance with Zurich.
Fletchers took out after-the-event (ATE) insurance and made no enquiries of Zurich until 2019 but the fee-earner ultimately decided she had been unable to establish after reasonable enquiry that the policy covered the claim.
The case settled in 2021 for £250,000 plus costs. The firm billed him £61,615, including a success fee of £30,365, capped at 25% of the relevant damages as required.
Mr Evans approached JG Solicitors over this and Judge Rowley noted how the Leeds law firm “seem to have had little difficulty in establishing the LEI insurer as distinct from the Zurich itself”.
Ruling on Mr Evans’ challenge to the success fee, he decided that the enquiries made by Fletchers “were lacking in numerous respects”.
The judge said: “Specialist personal injury solicitors, such as the defendant, are aware (or, at least, ought to be) that the company dealing with the LEI is not the same as the company dealing with e.g., the home contents insurance…
“Consequently, it seems to me, that making desultory enquiries of the Zurich, and without getting to the LEI company at all, cannot be said to be making any form of reasonable enquiry. The fact that the enquiry was being made two years after the accident could hardly be said to have helped matters.
“If anything, it seems to me that a more concerted effort to establish the position was required given the delay in doing so.
“In fact the correspondence, in my view, is drafted in a way which sought to encourage a lacklustre response from any potential LEI insurer so that the existing CFA arrangement was not disturbed by any putative BTE [before-the-event] cover.”
Judge Rowley continued that the wording of the policy indicated that it would have covered the claim and that Mr Evans would have used it.
“[S]ince 2013, and the general elimination of the recoverability of success fees, the use of BTE as a method which would not be expected to require a success fee and ATE insurance to be taken out, is something which weighs heavily in the balance.
“It does not seem to me that it takes much to persuade the court that if that option were available, then the claimant was likely to avail himself of it. After all, he had paid a fee for that insurance and could be expected to use it unless he was unable to do so.”
As a result, he disallowed the success fee, adding that the same reasoning would apply to the ATE policy if it had fallen for assessment.
A Fletchers spokesman said: “We respect the court’s decision, although we are disappointed with the outcome and are considering the judgment carefully.”
Mark Carlisle, founder of Checkmylegalfees.com – part of JG Solicitors – commented: “This is an important reminder to solicitors who intend deducting success fee and ATE premiums from client’s compensation of the continuing obligation to properly investigate alternative funding, and not just pay lip service to it.
“We welcome the decision and will now address the remaining issues in the assessment of the bill and the determination of the cash account.”
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