The Supreme Court held that solicitors acting under conditional fee agreements retained an equitable lien over settlement payments made directly by an insurer to their clients in low-value road traffic claims. Although the agreements protected the clients from having to pay anything personally, they still created a contractual responsibility for the solicitors’ charges, and the insurer had notice of the solicitors’ interest. The insurer’s appeal was dismissed, subject to the payments being capped at the amounts of the settlements.
The claims and the earlier decisions
Haven Insurance responded to six modest road traffic personal injury claims, notified by Gavin Edmondson Solicitors through the RTA Portal, by negotiating settlements directly with the claimants. The settlements included nothing for the solicitors’ costs. Haven wished to avoid the fixed costs and disbursements payable to the solicitors under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents. Each claimant had entered an identical conditional fee agreement, incorporating standard Law Society terms, together with a client care letter intended to ensure that the client would never have to meet the solicitors’ charges personally.
Law Teacher writing support
Writing a law essay?
We choose a writer who is an expert in your area of law and qualified to at least the academic level you select. Most of our writers hold a master’s degree or PhD, have teaching experience, or both.
Send us your question and, if you wish, any marking criteria. We’ll write an essay to your instructions.
The trial judge dismissed Edmondson’s claim to enforce a solicitor’s equitable lien, holding that there had been no collusion and that Haven lacked notice of the retainer terms. The Court of Appeal held that the agreements created no contractual liability upon which a lien could rest. It nevertheless ordered Haven to pay Edmondson the Protocol charges, treating equity as able to protect either an interest conferred by the Protocol or a contractual right to sue for those charges in the clients’ names.
The equitable lien
Lord Briggs, delivering the judgment of the Court, explained that the lien is an equitable security for the solicitor’s agreed charges, enforceable against the fruits of the litigation. Those fruits may be a judgment debt, an arbitration award or a debt due under a settlement, provided the debt arises in part from the solicitor’s work. Formal proceedings are unnecessary. The remedy exists to support access to justice, not out of any special regard for solicitors. Where the defendant’s insurer pays the claimant directly after notice of the solicitor’s interest, equity may require the insurer to pay the solicitor’s charges again.
Lord Briggs approved the summary in Khans Solicitors v Chifuntwe. The court will protect the solicitor’s claim on funds recovered or due if the payer colludes to cheat the solicitor or has notice of the claim. There must be a liability of the client for the charges and a fund against which that liability can be secured.
Liability under the conditional fee agreements
The client care letter stated:
You are responsible for our fees and expenses only to the extent that these are recovered from the losing side. This means that if you win, you pay nothing.
The Court of Appeal regarded this as extinguishing personal liability. Lord Briggs disagreed. Read with the conditional fee agreement, which made the client liable for basic charges, disbursements and a success fee on a win, and which defined a win to include a settlement for damages, the letter limited only the assets from which Edmondson could recover. It confirmed that recovery from the opponent was the means of satisfying a continuing responsibility. The clients therefore had a sufficient contractual liability to found the lien.
Notice
Haven knew from the claim notification forms that the claimants had retained Edmondson under conditional fee agreements and that the Protocol was being used. It knew that Edmondson had not been paid in advance and looked to the fruits of the claims. Recorded conversations confirmed that Haven understood it would otherwise have to pay the solicitors and settled directly in order to avoid doing so. That notice made the direct payments unconscionable. Edmondson’s work in lodging the claims contributed significantly to each settlement, including Mr Tonkin’s. Haven’s earlier discussion with him concerned a hire car; the personal injury offer was made after the claim had been acknowledged on the Portal.
The limits of the remedy
These conclusions made it unnecessary to adopt the Court of Appeal’s wider approach, which Lord Briggs rejected. The Protocol is voluntary. Breach may have costs consequences in later proceedings, but it gives the solicitor no legal right against the insurer capable of being secured by a lien. Suing in the client’s name, a form of subrogation, could not overcome the settlements the clients had already made and been paid. Equity may adapt its remedies, but one established principle is that the client must be responsible for the charges. The Protocol’s own balance assumes that the solicitor’s expectation of payment is supported by the lien. The court should not undermine the scheme’s voluntary character by coercive intervention merely because its terms have not been followed.
The lien therefore secured Edmondson’s charges under the retainers, but only up to the amount of each settlement debt and subject to the limits on recovery from the insurer already reflected in the Court of Appeal’s approach.
Verdict: The Court unanimously dismissed Haven’s appeal. The solicitors could enforce their lien, subject to the amount owed under each retainer and the ceiling of the settlement debt. The sums ordered below were to be reduced where they exceeded that ceiling.
Source: Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited [2018] UKSC 21
