National law firm Slater & Gordon has attacked the “widescale campaign” being waged against solicitors’ firms over costs deductions they have made from former clients’ damages in personal injury cases.
It spoke out after Master Rowley (pictured) in the Senior Courts Costs Office ruled that the High Court, rather than a Solicitors Act assessment, was the appropriate venue to challenge the composition of an after-the-event (ATE) insurance premium.
Checkmylegalfees (CMLF) claims that Slater & Gordon received a secret commission from the ATE insurer Elite, which is now in administration, but Master Rowley rejected an application to compel responses to a request for further information about the premium.
CMLF said Raubenheimer v Slater & Gordon UK Ltd [2021] EWHC B12 (Costs) was one of a group of 140 Solicitors Act cases it was bringing against the law firm, which are currently proceeding in the Senior Courts Costs Office with 10 test cases.
In road traffic cases, Slater & Gordon deducted £254.24 for the ATE policy. Evidence obtained from Elite’s administrators, PwC, indicated that, if the case had concluded, “a claims handling commission of £30 and a claims fund contribution of £176.13 would fall due” to be paid to the law firm.
Master Rowley noted that “some caution as to the terminology used by the administrator needs to be applied since the word ‘commission’ seems to be used interchangeably with other words in the email correspondence”.
He said it was CMLF’s case that “payments appear to have been made by Elite insurance to the defendant but such payments were not disclosed to the claimant”. CMLF alleges this was a breach of fiduciary duty.
CMLF issued a part 18 request seeking information from Slater & Gordon about any payments received from Elite, but the firm refused to respond, arguing that the claimant was not entitled to make the request in these proceedings.
In 2019, the Court of Appeal in Herbert v HH Law made it clear that the claimant was not entitled to challenge the amount of an ATE insurance premium through Solicitors Act proceedings. This meant it could not request information via part 18.
CMLF argued that the premium could instead be investigated by the court via the cash account rather than the bill of costs.
Master Rowley rejected this, holding that the court’s consideration of the cash account was limited to whether particular items ought to be in it at all and did not extend to their amount.
There was “simply no room for the court in a Solicitors Act assessment to consider the composition of the premium”, he said.
“The remedy of the client if the monies paid out had in some way been in error would be to bring proceedings against the solicitor for breach of one of a number of potential duties. I can see no reason to distinguish between the ATE premium and any other cash account payment in this respect.”
Master Rowley also refused to invoke the court’s inherent jurisdiction to scrutinise the ATE premium in the Solicitors Act proceedings. “Bringing a second set of proceedings would no doubt be less ‘convenient’, to use the Court of Appeal’s phrase, than being able to deal with everything in these proceedings.
“But convenience is not sufficient to justify attempting to deal with matters which do not seemingly fit in one proceedings rather than obliging the parties to go elsewhere.”
He said the claimant appeared to have sufficient evidence with which to bring separate proceedings, during which Slater & Gordon would have to set out its case as to why the claimant was wrong.
Slater & Gordon said in a statement that it was “deeply concerned that such a considerable sum of costs has been spent pursuing this request which is entirely disproportionate considering the refunds being claimed”.
A spokesman continued: “Our position has been clear throughout: the application made had no merit and was purely a fishing expedition made in the course of a widescale campaign against solicitors’ firms so we are pleased to see that the judge has dismissed it… We will robustly defend any accusation we are not fair and honest with our clients.
“Concerningly, there appears to be a growing industry aimed at trying to extract refunds from a number of law firms by targeting ex-clients with promises of getting their money back if they’ve ever had any deductions from their damages.
“This assumes that the deduction of legitimate fees is in some way unlawful or dishonest, and that firms are profiting from undisclosed commissions on insurance policies – which is not the case.”
The spokesman referenced the decision earlier this year by District Judge Rouine in Swann v Slater & Gordon, who determined that clients provided informed consent for deductions.
He added: “Our primary concern in these cases are our former clients – those who are now being targeted, without any basis, by claims recovery firms. These individuals, who are often vulnerable and whom we have supported through a difficult period of their lives, should not have to go through this unnecessarily adversarial and costly process.
“We have complete confidence in our retainers and our customers are at the centre of everything we do. As a business, we are focused on providing clients with the best service possible, which includes being fair, clear and open about our fees.
“Slater & Gordon will always robustly challenge any suggestion that we have inappropriately charged fees that we were not due, or which clients had not understood and agreed to at the outset of their claim.”
Mark Carlisle, a consultant to CMLF, said: “We are disappointed with the decision on jurisdiction in respect of part 18 questions in the context of a cash account. However, this decision, even if upheld, does now give our clients a clear route to establishing whether or not there have been undisclosed commissions at play in the ATE market.”