11.12.08  

Defendants unsuccessful in challenge to Accident Line Protect scheme; claimants’ solicitors did not have an “interest” within the meaning of CFA Regulations.  

Three linked appeals were concerned with the construction of regulation 4(2)(e)(ii) of the Conditional Fee Agreement Regulations 2000 in relation to the ALP scheme. The Defendants argued that in each case the Claimants’ solicitors were in breach of the Regulations, in that they failed to disclose to their client that they had an “interest” within the meaning of the Regulations and as a result the Claimant was not entitled to recover some, or all of their costs.  

Held: The Court of Appeal held that the purpose of the regulation was to ensure that Claimants’ solicitors act and give advice independently of their own interest. A solicitor has an interest if a reasonable person with knowledge of the relevant facts would think that the existence of the interest might affect the advice given by the solicitor to his client. The overriding consideration was the quality of the Accident Line ATE policy. Since there was nothing in the arrangement that might affect the solicitor’s advice or judgment in a manner adverse to the client, disclosure was not required. The provisions of the scheme in relation to exclusivity, referrals and rebates did not affect this position.  

Comment: The Court of Appeal commented that this is yet another round in what has become known as the costs wars between Claimants’ lawyers and Defendants’ liability insurers arising out of the introduction of CFAs in the 1990s. The Regulations in question were repealed as of 1 November 2005, but there are still a considerable number of disputes arising out of them which remain to be resolved. Whilst the outcome of this case is likely to bring to an end challenges to the Accident Line Protect Scheme, it is still open to insurers to bring challenges to other schemes, which will be considered on their own merits.