Retrospective CFA

Birmingham City Council v Forde [2009] EWHC 12 (QB) 13 January

The tenant had signed a conditional fee agreement (CFA) with her solicitors in relation to proceedings against the local authority for failure to repair her property. Shortly before the proceedings were settled the local authority had challenged the validity of similar CFAs and her solicitors wrote to her asking her to sign a second CFA. The letter explained that the legal costs up to that date would be dealt with under the second CFA unless the court ruled it invalid, in which case they would revert to the first CFA, and pointed out that the second CFA contained a success fee, whereas the first did not. The consideration expressed in and for the second CFA was that the solicitors would continue to act for the tenant. The local authority submitted that (a) the letter did not form part of the retainer agreement; (b) there was no consideration for the second CFA; (c) the second CFA had to be presumed to have been procured by undue influence as it was manifestly to the tenant’s disadvantage because of the success fee and because it imposed a retrospective liability whereas, if the first CFA was invalid, she was not liable for the solicitors’ fees under it; (d) a retrospective success fee was abhorrent; and (e) a retrospective CFA, with or without a success fee, was unenforceable, particularly when the CFA was made after the Conditional Fee Agreements (Revocation) Regulations 2005 but related to a period before those Regulations came into force when the solicitor would have had to comply with the notice requirements in the Conditional Fee Agreements Regulations 2000 reg 4.