CFA unenforceable

Hughes v Newham London Borough Council SCCO 28 July LTL

By failing properly to inform the client of the availability of legal aid, the solicitors had departed from what was required of them under regulation 4(2)(d) of the Conditional Fee Agreements Regulations 2000 and that departure had had a materially adverse effect upon the protections afforded to the client. The Regulations had been intended to duplicate the client care code. Hollins v Russell [2003] EWCA Civ 718; [2003] 1 WLR 2487 applied. Therefore, for a CFA to be valid, a solicitor had to ensure as far as possible that the client understood what he was entering into and was able to make an informed choice of the funding options available. Compliance was not achieved merely by mentioning that legal aid was possible to someone likely to qualify for it, if there were accompanying words which sought to discourage the client from pursuing it. The burden was on the solicitors to put the client’s best interests first. The departure from the Regulations had resulted in the adoption of a funding system under which the client had incurred substantial irrecoverable costs, namely, the insurance, interest on the loan taken out and, but for the Regulations, the contractual obligation to pay success fees as well as base fees. Accordingly it was unreasonable for the claimant to seek to recover from the local authority the additional liabilities in the form of the success fee and insurance premium which had resulted from the chosen method of funding. As the CFAs were unenforceable, the local authority’s maximum liability for costs was in respect of paid disbursements and any costs of assessment allowed.