Supreme Court refuses to hear two cases on solicitors’ rights

Supreme Court: Permission refused x 2

The Supreme Court has let down both the profession and clients by refusing to hear two cases on solicitors’ rights brought by a specialist London law firm, its managing partner has argued.

Ashkhan Candey, who runs disputes-only firm Candey, predicted that the court would have to return to the issues raised in both in the future and find that the Court of Appeal had been wrong.

The Supreme Court last week announced that it had refused permission to appeal in the cases of Candey v Miller and Candey v Bosheh, saying neither raised an arguable point of law.

In Miller, the Court of Appeal decided last March that the public policy behind the ban on a solicitor taking an assignment of their client’s cause of action prior to judgment holds good in the era of damages-based agreements (DBAs).

Mr Candey said the firm had accepted an assignment of a claim from a client who was insolvent and then passed away so as to test the law.

The terms of the assignment meant that, after payment of the firm’s fees, which did not exceed those under a previous DBA, the proceeds of the litigation would have been paid to the former client’s estate.

Mr Candey said: “This case sought to achieve a step towards victory for those who do not have access to cash but have a meritorious claim. As a civilised society, it is monstrous that most people are denied civil justice because they cannot afford to pay huge legal costs.”

He argued that “the only realistic option of achieving this is with regulated lawyers acting on reasonable no-win, no-fee terms”.

“The effect of the current law is that lawyers fear acting on a contingency for anyone who might in the future fall into insolvency…

“As soon as a trustee in bankruptcy or liquidator is appointed the unpaid lawyer would likely be sacked and replaced. Not having yet achieved success they would rank as an unsecured creditor with no lien to rely on.

“The lien or equitable charge that secures lawyers’ fees above everyone else could only kick in if they had been instrumental in the recovery. Essentially you might have to bananas to agree to act for impoverished clients even though they have a good case. That is not right, just or fair.”

The solicitor said the outcome was “bad news as it unfairly restricts access to justice” – the rules around champerty and maintenance were “outdated” given that the legal profession was now properly regulated.

This was despite the trio of cases about the solicitor’s lien the Supreme Court has decided in recent years – the most recent, just before Christmas, was also a Candey case – showing how important the court regarded the principle of access to justice, he said.

In Bosheh – where Candey was trying to recover £3m in fees from a former client – the Court of Appeal held that there was no implied duty of good faith in a solicitor’s retainer. Here, the underlying litigation was settled on terms which meant that Candey had no express entitlement to its costs.

The claims relied heavily on both privileged and confidential material – the latter having been obtained after the settlement. At first instance and on appeal, the court ruled that Candey could not rely on either the privileged nor some of the confidential material.

Mr Ashkhan contended that the appeal to the Supreme Court was challenging clients’ “abuse” of legal professional privilege.

“Perhaps surprisingly, the Court of Appeal also found that a lawyer with a claim against a client for unpaid fees could use prima facie privileged material, whilst a lawyer with a much more serious claim in fraud could not.

“Moreover, the decision to limit the extent of the crime-fraud exemption raises a tricky question for lawyers who suspect money laundering. The law requires them to report suspicions to the National Crime Agency, with failure to do so rendering the lawyer at risk of being jailed.

“But a report made in the context of privileged advice renders the lawyer liable to his client for breach of duty.” He urged the Law Society to take up the issue.

Mr Ashkhan continued: “The case raises important issues on the topics of lawyer’s rights and access to justice. If the Court of Appeal is correct, this places the defrauded lawyer in a lower position than any other person.

“Further, in the modern world of contingent fee agreements, the possibility of lawyers being the subject of civil wrongs – where they have not otherwise received payment for their services – is greater than ever.”

This could again discourage lawyers from acting on a contingency basis to the detriment of access to justice, he argued.

“At some point in the future, we believe that the Supreme Court will inevitably look at these issues closely and rule that the Court of Appeal in this case was wrong.”

Candey was involved in yet another significant funding case last year, in which the Court of Appeal ruled that defendant DBAs were not lawful.

Mr Ashkhan said that though the firm disagreed with the decision – which “raises serious questions about the equality of arms between defendants and claimants, particularly in circumstances where defendants, unlike claimants, have not chosen to become embroiled in litigation” – for various reasons it elected not to apply to the Supreme Court for permission to appeal.

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