Cap: Solicitors can only take 25% of PI client’s damages
A law firm that charged personal injury clients more than it was allowed to when acting under damages-based agreements (DBAs) has been fined nearly £11,000 by the Solicitors Regulation Authority (SRA).
The 2013 DBA regulations only allow lawyers to deduct up to 25% of a client’s damages in personal injury cases for their fees, but Bradford firm Proctor & Hobbs was charging 35%.
According to a notice published yesterday by the SRA, an investigation found the firm had deducted this figure in all of the 13 road traffic accident files it sampled.
It later transpired that there were at least 26 client files where this occurred.
The firm then obtained independent advice, which confirmed that it was not entitled to deduct 35%. It refunded affected clients any deductions over 25% and paid them compensation of £100 each.
The SRA said Proctor & Hobbs failed to uphold public trust or act in the best interests of its clients, and breached the rules on complying with legislative requirements and keeping up-to-date with them.
A fine was appropriate because the misconduct was “serious” and “clients will have been placed in a disadvantageous negotiating position in agreeing to the firm’s 35% deduction from damages”.
Applying the SRA’s fining guidance led to a penalty of 2.8% of the firm’s annual turnover and then reduced “to give credit for the firm’s swift and decisive action once the issue had been identified”.
This led to a figure of £10,730 plus costs of £1,350.
