Slater & Gordon: Retainers not defective
The new Senior Costs Judge has rejected a major challenge to how Slater & Gordon (S&G) charged personal injury clients, finding it provided enough information for them to agree to deductions from their damages.
Judge Jason Rowley, who took up the role permanently at the start of this month, decided that “the combination of an oral explanation of the key terms in a simple fashion together with provision of a comprehensive written agreement was a perfectly appropriate method for informing the client of the component parts and signing them up in a businesslike manner”.
There was no sign that clients were pressured into signing, he found.
The question of whether clients were given enough information when signing up to a conditional fee agreement (CFA) has dogged the courts for some years and in this case, brought by Leeds firm JG Solicitors, 224 former clients of S&G are suing the firm to recover fees they paid.
S&G has been a particular target for these retrospective retainer challenges by both JG Solicitors and Checkmylegalfees.
Judge Rowley considered preliminary issues for 10 test cases, seven of which involved road traffic accidents and three accidents at work. To a large extent they turned on whether the claimants received sufficient information about the deduction S&G made from their damages.
Since the recoverability of success fees ended in 2013, claimant law firms have been able to deduct no more than 25% of a PI client’s damages for the success fee, whatever level that success fee has been set at.
Judge Rowley listened to the recording of a standard onboarding calls between S&G and a client which explained the key parts of the paperwork that had been sent over.
The claimants said they should have received a more detailed oral description of the documents they were being requested to sign.
The judge did not agree: “First, the need for oral explanations to prevent unenforceability was reduced originally in 2003 and then revoked in 2005 in terms of the secondary legislation.
“Secondly, there is no reason given by the claimants as to why a long and detailed oral explanation of the documents was necessary in addition to the wording of the documents themselves.
The S&G call handler described what would happen if the client won, lost or otherwise terminated the retainer.
“A description which goes into more detail about the workings of a CFA runs into the danger of getting into the weeds of matters such as the indemnity principle and which would then involve the peril of potentially confusing the client rather than clarifying issues to them.
“In my judgment, the combination of an oral explanation of the key terms in a simple fashion together with provision of a comprehensive written agreement was a perfectly appropriate method for informing the client of the component parts and signing them up in a businesslike manner.
“From the evidence given by the claimants in the witness box, in my view they understood the key information given in the oral explanation.”
Judge Rowley described himself as “not keen” that the explanation of the actual success fee was “downgraded as a key piece of information”, but the key term was “the one which explains the worst potential outcome to the client”.
This was the percentage cap on damages and not the original success fee.
The key passages in the documents were set out “clearly in plain and intelligible language”, a view is strengthened by “the ready understanding of them by some of the claimants who were quizzed about them in the witness box”.
Judge Rowley also dismissed the argument that a CFA such as this, effectively taking 25% of damages, was a damages-based agreement (DBA) and unenforceable because it did not comply with the DBA regulations.
“The claimants’ argument is based entirely on the proposition that these agreements are designed to take 25% of the claimant’s damages, come what may. There is no direct evidence to support this proposition,” he said. “The documentation refers to the deduction being ‘up to 25%’…
“In my judgment, there would need to be some express statement or documentation regarding an intention to incur costs which justify the 25% deduction on each case for this argument to get off the ground. In their absence, it does not seem to me that this point gains any traction.”
The judge agreed with the point made by Robert Marven KC, representing S&G, that “if the claimants were right, all DBAs would be unenforceable CFAs as well as all CFAs being unenforceable DBAs which would create ‘horrific consequences’”.
Other claimant arguments based on the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 failed too.
Their only success was in reducing the 25% success fee S&G charged to 15% for drivers and 10% for passengers.
An S&G spokeswoman said: “We are pleased with the judgment. We have repeatedly stated in response to these challenges that we reject any suggestion that former clients had been pressured to sign up to retainers or that the retainers were defective in some way.
“We are pleased that the costs judge found, expressly, that there was no pressure to complete the process and that the retainers were found to be fully enforceable.
“At Slater & Gordon, we always ensure that our clients have the information that they require to make informed decisions, particularly in relation to their legal costs. The costs judge found that information was provided to our clients in a comprehensive, appropriate and prominent manner whilst using plain and intelligible language.
“This judgment is a vindication of Slater and Gordon’s approach in ensuring that our clients fully understand the way in which their claim will be funded.”
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