Skip to main content
CAT event update
For the latest on the Turkey earthquake, please visit our event page.
Learn more
  • Select a Site Blog
    US-Global
    Canada en fr
    United Kingdom
    Australia

    By Country / Region

    • Argentina en es pt
    • Australia
    • Belgium
    • Brazil en pt es
    • Canada en fr
    • The Caribbean
    • Chile en es pt
    • China
    • Denmark
    • Finland
    • Germany en de

     

    • Hong Kong
    • India
    • Indonesia
    • Italy en it
    • Japan
    • Malaysia
    • Mexico en es pt
    • Netherlands en nl
    • Norway en no
    • Panama en es pt
    • Peru en es pt

     

    • The Philippines
    • Poland en pl
    • Singapore
    • Spain en es
    • Sweden en sv
    • Taiwan
    • Thailand
    • United Arab Emirates
    • United Kingdom
    • United States

    By Country / Region

    • Argentina en es pt
    • Australia
    • Belgium
    • Brazil en pt es
    • Canada en fr
    • The Caribbean
    • Chile en es pt
    • China
    • Denmark
    • Finland
    • Germany en de
    • Hong Kong
    • India
    • Indonesia
    • Italy en it
    • Japan

     

    • Malaysia
    • Mexico en es pt
    • Netherlands en nl
    • Norway en no
    • Panama en es pt
    • Peru en es pt
    • The Philippines
    • Poland en pl
    • Singapore
    • Spain en es
    • Sweden en sv
    • Taiwan
    • Thailand
    • United Arab Emirates
    • United Kingdom
    • United States

    Specialty Sites

    • Broadspire
    • Catastrophe Services
    • Contractor Connection
    • Crawford Blog
    • Crawford GTS
    • Crawford Legal Services
    • Investor Relations
    • WeGoLook
  • Investors
  • Careers
  • Blog
  • Subscribe
  • Login
    • CMS Portal
    • CAT Adjuster Portal
    • VTECH
    • XactAnalysis
  • Submit a Claim
    • US Claim Submission Portal
    • Text "Claim" to 877-531-4803
  • 24/7 Hotlines
    • ClaimsAlert Hotline
    • 877-346-0300
    • Transportation Claims Hotline
    • 866-420-1689
    • Submit a Claim
    • US Claim Submission Portal
    • Text "Claim" to 877-531-4803
Crawford & Company logo
  • Services
    • Loss Adjusting
    • Third Party Administration
    • Managed Repair
    • Medical Management
    • On-Demand Services
    • Catastrophe Response
    Global Loss Adjusting Preview Cards 480X270

    When loss occurs, Crawford is there with the right team, the right technology, and the right processes to help you restore and rebuild.

    Global Third Party Administration Preview Cards 480X270

    From loss adjusting to medical management to managed repair and more, Crawford delivers effective TPA solutions to save you time and money.

    Global Managed Repair Preview Cards 480X270

    Deliver a world-class experience to your customers from first notice of loss all the way through to finished repair.

    Global Medical Management Preview Cards 480X270

    A comprehensive set of clinical management programs focused on compassionate care.

    Global Wegolook Preview Cards 480X270

    Bringing the gig economy to the enterprise to deliver faster, more cost-effective results.

    Global Catastrophe Services V1 Preview Cards 480X270

    Industry-leading adjusters combined with innovations in technology and workforce management deliver value to clients when they need it most.

    Service Catalog

    Get details on all of Crawford's services in our easy-to-navigate online catalog.

    Explore our services

  • Industries

    Insurance & Risk

    • Carriers
    • Brokers
    • Corporates
    • The Lloyd's Market

    Other Industries

    • Agriculture
    • Construction
    • Entertainment and Events
    • Finance
    • Healthcare
    • Hospitality
    • Manufacturing
    • Marine
    • Mining
    • Power and Energy
    • Public Sector
    • Real Estate
    • Retail and Wholesale
    • Transportation
    Global Insurance Carriers Previewcard

    Optimize your claims processes and delight your customers.

    Global Insurance Brokers Previewcard

    Backed by our innovative array of services, you’ll always be the hero to your clients.

    Global Corporates Previewcard

    Comprehensive solutions for businesses in any industry.

    Global Preview Card Lloyds 480X270

    Exceeding expectations for syndicates, brokers, insureds, coverholders, and MGAs.

    Uk Agriculture Preview 480X270

    Understanding the ever-changing risks of the modern rural economy.

    Global Construction Previewcard

    Specialized expertise for those who build.

    Camera man filming a scene in a doctor's office

    Navigating the complex landscape of production risk.

    Aerial view of city

    Supporting the unique and ever-changing risks of financial institutions.

    Group of healthcare professionals meeting

    Delivering on our mission so you can focus on yours.

    Global Hospitality Preview Cards 480X270

    Driving efficiency, building customer satisfaction and protecting your brand.

    Batteries on a conveyor built in a manufacturing facility

    Keeping the engine of commerce running.

    Uk Marine Transportaion Preview 480X270

    Expert service in a complex, large-scale and high-profile sector.

    Mining equipment outdoors

    Global expertise for large-scale operations.

    Solar and wind farm

    Knowledge, skills and experience in energy, power generation, and renewables.

    Ornate columns outside a government building

    Innovation and data-driven efficiencies deliver value for public entities.

    Global industry real estate preview

    Exceptional service, information and reassurance in a fast-paced business.

    Delivery truck unloading at a commercial loading dock

    Managing risk in one of the world's largest industries.

    Global Transportaion Preview Cards 3 480X270

    Frictionless intake, rapid response, and comprehensive coverage.

  • Innovation
    • Crawford Technologies
    • Asservio
    • On-Demand Estimatics
    • WeGoLook
    • YouGoLook
    • 3D Property Scan
    • Digital Desk
    • Digital Assist
    • TruLook
    • Recall 360
    • Escape of Water
    Global Innovation Preview Cards 480X270 V2

    We’re not just embracing change, we’re leading it.

    Global innovation asservio preview

    Leading-edge estimate review technology that eliminates friction and ensures faster, more accurate property repair estimates.

    Global code preview

    Streamlined, accurate estimating from a single source.

    Global Wegolook Preview Cards 480X270

    Combining technology with an on-demand workforce to help businesses gather and validate information anytime, anywhere.

    Global yougolook preview 1 480x270

    Empowering policyholders to safely submit their own claims data.

    Global innovations 3d property scan previewcard

    Get a detailed report with measurements and information about the exterior of a property by taking just a few perimeter photos.

    Digital desk preview 480x270

    Access next-gen claims processing

    Global digital assist preview card

    Using Digital Assist, adjusters can quickly and easily request the individual services they need to close claims.

    Global Tru Look Preview Cards 480X270 V2

    Claims handling that adapts to your needs.

    Global Preview Recall 360 480X270

    Helping you prepare for and respond to any product recall.

    Global Escape Of Water

    Combining IoT technology with IICRC certified water loss specialists to deliver rapid and reliable response.

  • Expertise
  • About
    • Our Story
    • Our Locations
    • Leadership
    • Investors
    • Global Citizenship
    • Careers
    • Press
    • Blog
    • Contact us
    Global Our Story Preview Cards 480X270 V2

    Learn about Crawford's mission, vision, values, and the over 75 years of history that have made us who we are today.

    Global Locations Preview Cards 480X270

    With hundreds of offices and service centers around the world, Crawford is everywhere you need to be.

    Global leadership previewcard 2 480 X270

    Crawford’s strong and seasoned leadership team leverages its extensive knowledge and industry experience to drive our business.

    Global Investors Preview Cards 480X270

    Visit Crawford's investor relations website for news and information relevant to our shareholders.

    Global gcr preview 480x270

    We strive to make a positive impact on the communities in which we live and work.

    Global Preview Careers 480X270 V2

    At Crawford, employees are empowered to grow, emboldened to act and inspired to innovate. Won't you join us?

    Global Press Preview Cards 480X270

    Discover recent placements, company news and additional Crawford resources.

    Global Blog Nav Preview

    The Crawford blog publishes regularly on our people, our company and the industries we serve.

    Global Contact Us Preview Cards 480X270 V2

    We’re here to help! Team members around the world are standing by to assist you and your business.

  • Resources
  • Free Consultation
  • Home
  • Blog
  • Post
  • Blog
  • Post
  • Category:
  • All Categories
    • Company
    • Expertise
    • Innovation
    • People
    • Services
    • COVID-19
    • Legal Services

Wednesday, October 28, 2020

The start of something big? Informed consent and the operation of CFAs

Blogfeature legalservices 2020

Background

The judgment in this case centres on whether solicitors should be able to take payment of a success fee from damages awarded to the Claimant. The case was for damages for personal injury arising out of a road traffic accident and was made under the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents. There was a Conditional Fee Agreement in place.

The claim was settled following submission of the Stage 2 Settlement Pack for £1,916.98 in damages, plus fixed costs and disbursements of £1,783.19. The Claimant’s solicitors, CAM Legal Services Ltd (“CAM”) took £385.50 from the amount paid to the Claimant, Darya Belsner (“Belsner”) which represented a success fee of 25% of the damages recovered pursuant to the terms of the CFA which capped the success fee and which formed part of the retainer between Belsner and CAM.

Belsner challenged the deduction. Between solicitor and client S.74 (3) of the Solicitors Act prevents payment of more than would be payable between parties – unless the rules of court permit. CPR 46.9 (2) allows a greater sum to be payable as long as there is a written agreement between the parties.

The Court found that Belsner was only responsible for the fixed costs to the level of £500 and that CAM was only entitled to charge a reasonable success fee on the level of profit costs recovered (being 15% of £500 plus VAT), the effect being there must be a £295.50 repayment to Belsner. Why?

The grounds for the decision

The court considered two pertinent aspects of the case. Firstly, it confirmed that a solicitor is a fiduciary in circumstances where the solicitors wish to take a profit by way of fees over and above the level of costs that can be obtained from the other side. Secondly, and because of the fiduciary nature of the relationship and the provisions of statute and the CPR it was important for the solicitor to have obtained the client’s informed consent to the proposed charging.

The Court noted that in the documents sent by CAM to Belsner at the outset of the case, CAM’s estimated basic charges (£2,500) were five times the amount (£500) which CAM might be entitled to recover from the defendant if the claim settled for less than £10,000 at Stage 2 in the Protocol. The Court concluded that this ought to have been brought specifically to Belsner’s attention, if she was to give informed consent to the agreement insofar as it permitted payment to CAM of an amount of costs greater than that which she could have recovered.

CAM asserted that, notwithstanding that they did not do so, by the terms of their retainer, they were entitled to take more than the total damages obtained. It is clear from the judgment that any such argument would not meet with success.

CAM has reportedly already said that the decision will be challenged in the Court of Appeal.

What lies ahead? The next PPI?

Apart from the appeal, Belsner’s solicitors are reported to have said that the judgment will potentially enable five million people to claim refunds of excessive success fees deducted from compensation under CFA’s in similar circumstances. Even allowing for an exaggeration in the number of potential Claimants and allowing for a lower average level of deduction from compensation, the value of the potential claims could run into hundreds of millions of pounds.

Response to Claims

When is the disclosure of information sufficient to ensure informed consent?

In this particular case, the Claimant was told in general terms that she may have to pay her solicitors more than could be recovered from the other side. There were a number of such general warnings. The court found this was simply not enough to obtain informed consent especially where costs of £2,500 were estimated and it was possible that settlement may take place with fixed costs of only 20% of that sum payable by the other side.

In future claims whether there has been sufficient disclosure in the retainer documents, and otherwise, to enable the provision of informed consent will depend on the facts of each case.

At present there is no easily defined yardstick to measure the sufficiency of information given.

Will the duty to provide information be variable in response to the lack of sophistication of the claimant? Yes, that seems likely. There may also be a different approach that is appropriate for commercial clients.

Are there causation arguments? In a breach of fiduciary duty case, instead of simply requiring a causal link, the court looks to see what would have happened if the breach had not taken place. This is not the same as the general rule on causation. However in this case no such arguments were raised as the issue was simply whether informed consent was needed and had been given. If not the statute and the CPR combine to limit the amount that can be paid to the solicitors by their client. Whether the courts will allow exploration of what may have happened had the breach not taken place is to be seen but it may well be that there is no room for such arguments.

If sufficient information had been provided and settlement achieved on a different basis would a lower level of damages have been accepted? If so can it be argued that this will balance out the amount claimed back in costs? It may not do so as the breach of fiduciary duty is directed at the improper profit earned by the fiduciary and the level of damages may not be relevant to this loss. Nevertheless this approach could always be argued.

If there is a potential/significant risk, claims can be ‘bought off’ by an early offer. Given that the Court of Appeal is likely to be considering this matter, it would not be advisable to be making any offers at present, although, assessment of the retainer documentation is advisable to enable a preliminary assessment of risk.

No doubt there will be attempts to make blanket notifications.

Informed Consent – when should it be obtained?

The question then arises as to when (and how frequently) informed consent should be obtained from a client. This will vary on a case-by-case basis. However, as a general rule, it would be advisable for solicitors to obtain informed consent:

  1. At the outset of a claim once an initial review of the evidence has been conducted by the solicitor
  2. Upon receipt of documentation which has a material impact upon the claim and the recovery of costs (e.g. Expert’s reports, medical records, incident reports, etc.)
  3. Immediately prior to issuing Court proceedings
  4. At all key stages of the Court proceedings (i.e. at the disclosure stage, upon the exchange of expert evidence, the exchange of witness statements, at the CMC stage and immediately prior to trial) and
  5. When an event occurs during the course of the claim which has a material impact upon the prospects of success and/or the recoverability of costs.

Are there wider implications?

The relationship between a solicitor and their client is one in which the client reposes trust and confidence in the solicitor. It is often defined as a fiduciary relationship. In respect of litigation costs, this recent decision is a stark reminder that, as a fiduciary, a solicitor is not permitted to receive profit from their client without obtaining informed consent beforehand.

Although the fulfillment of fiduciary duties will be assessed on a case-by-case basis, this judgment will inevitably place solicitors’ conduct on costs generally firmly under the microscope.

Is this problem limited to cases with a CFA?

The burden of complying with fiduciary duties when advising on the recovery of costs could widen the application of this judgment to more refund claims. The wording of CPR 46.9 is said to apply to every assessment of a solicitor’s bill to a client except a bill paid by Legal Aid. This means that we could see disgruntled Claimants from across the entire litigation spectrum coming to the fore and intimating refund claims against their solicitor. It appears that the principles in this judgment could apply to all types of litigation (including ‘big ticket’ litigation) where informed consent has not been obtained from a client regarding any potential shortfall in recovered costs as against costs payable by a client. Should this prove to be the case, we could see the birth of a monumental wave of refund claims against solicitors both with and without CFAs. Hopefully the Court of Appeal will restrict the possible ambit of the decision.

If that is not the case the principle could be taken further and we may see the courts directing their attention at solicitors who fail to properly budget claims from the outset in order to ensure that clients are given focussed advice on the economics and strategy of claims and can give informed consent as a result.

Conclusion

Belsner may be the start of a new wave of claims arising from solicitors working on CFAs but this is subject to what happens in the Court of Appeal. The claims farmers are eagerly awaiting the outcome. After the Court of Appeal it is possible that attention could be directed more strenuously at solicitors’ advice on costs more generally.

Related posts

Crawford celebrates first graduates from SMART sustainable recruitment drive

Wednesday, September 28, 2022

Crawford celebrates first graduates from SMART sustainable recruitment drive

Read more about Crawford celebrates first graduates from SMART sustainable recruitment drive
Seeking to inspire

Monday, September 26, 2022

Seeking to inspire

Read more about Seeking to inspire
Blog post feature image cc expertise 1000x500

Thursday, September 05, 2019

Achieving Estimate Accuracy

Read more about Achieving Estimate Accuracy

Crawford & Company logo

Services

  • Loss Adjusting
  • Third Party Administration
  • Managed Repair
  • Medical Management
  • On-Demand Services
  • Catastrophe Response
  • Full Service Catalog

Industries

  • For Carriers
  • For Brokers
  • For Corporates
  • For the Lloyd's Market
  • For Construction
  • For Healthcare
  • For Hospitality
  • For Transportation

About

  • Our Story
  • Our Locations
  • Leadership
  • Global Citizenship
  • Careers
  • Press
  • Blog
  • Contact

Legal

  • Terms of Use
  • Privacy Policy
  • Cookie Policy
  • Employment Policy
  • EU Privacy Notice
©2023 CRAWFORD & COMPANY. All Rights Reserved.
  • Home
  • Services
    • Loss Adjusting
    • Third Party Administration
    • Managed Repair
    • Medical Management
    • On-Demand Services
    • Catastrophe Response
    • Full Services Catalog
  • Industries
    • Insurance & Risk
    • Carriers
    • Brokers
    • Corporates
    • The Lloyd's Market
    • Other Industries
    • Agriculture
    • Construction
    • Entertainment and Events
    • Finance
    • Healthcare
    • Hospitality
    • Manufacturing
    • Marine
    • Mining
    • Power and Energy
    • Public Sector
    • Real Estate
    • Retail and Wholesale
    • Transportation
  • Innovation
    • Crawford Technologies
    • Asservio
    • On-Demand Estimatics
    • WeGoLook
    • YouGoLook
    • 3D Property Scan
    • Digital Desk
    • Digital Assist
    • TruLook
    • Recall 360
    • Escape of Water
  • Expertise
  • About
    • Our Story
    • Our Locations
    • Leadership
    • Global Citizenship
    • Careers
    • Press
    • Blog
    • Contact us
  • Resources
  • More from Crawford
  • Investors
  • Careers
  • Blog
  • Subscribe
  • Login
    • CMS Portal
    • CAT Adjuster Portal
    • VTECH
    • XactAnalysis
  • Submit a Claim
    • US Claim Submission Portal
    • Text "Claim" to 877-531-4803
  • 24/7 Hotlines
    • ClaimsAlert Hotline
    • 877-346-0300
    • Transportation Claims Hotline
    • 866-420-1689
    • Submit a Claim
    • US Claim Submission Portal
    • Text "Claim" to 877-531-4803
  • Search for Expertise

Interested in learning more?
Get a free consultation with one of our experts.

Complete this form and we’ll get back to you at the contact details provided.