Solicitor struck off for settling costs claim without taking instructions from client

A solicitor who settled a £2.3m costs claim without telling a client who had asked to be involved in every decision about costs has been struck off by the Solicitors Disciplinary Tribunal.

Anjan Patel, admitted in 1998, was a consultant at London firm Neumans specialising in commercial litigation between April 2007 and July 2017, when the law firm was shut down by the SRA. He was paid a percentage of the fees he generated. After that, he was consultant and head of commercial litigation at London firm Cubism Law until May 2019. It went into administration later that year.

At Neumans, Mr Patel acted for ‘Client A’ and ‘Client B’, who settled a claim against them by ‘T’ and their counterclaim by accepting £2.2m in damages plus costs. The law firm had been acting under a conditional fee agreement (CFA) and this was revised so that it would receive 65% of the amount received in both costs and damages, with the two clients splitting the rest.

Client A suggested making an offer to T of £2.2m to settle the costs on the basis that Neumans capped its fees at £1.6m, which was less than what had been incurred. He said that, if this were not accepted, they would go to assessment.

Later that day, Mr Patel wrote to T’s solicitors, offering to settle the costs at £2.4m. T made a counteroffer and then Mr Patel put forward £2.33m, which was accepted. Client A was unaware of any of this.

Mr Patel argued before the tribunal that clause 5 of the CFA entitled him to act unilaterally. This provided: “If we and your opponent cannot agree the amount of costs your opponent will pay to you, the court will decide how much you can recover. If the amount agreed or allowed by the court does not cover all our basic charges, our disbursements and success fee then you pay the difference.”

Client A had asked about clause 5 and the tribunal found he was not told that it entitled the firm to settle any costs claim unilaterally. This was because, at the time, Mr Patel did not believe it did or he would have said otherwise, the panel decided.

The ruling said: “There was nothing in the wording of that clause that explicitly or implicitly allowed the firm to unilaterally settle the costs claim. The tribunal found the respondent’s interpretation to be incredible and contrary to the other clauses in the agreement.

“It was not in a client’s best interests to act contrary to his express instructions. Nor was it in a client’s best interests for a solicitor to take decisions on his case and act on them without any reference to his client.” This was in breach of various SRA principles, including the duty to act with integrity.

Mr Patel delayed for two months before telling Client A that the costs claim had been settled – which he said was in the interests of the Client B, the firm and others – but the SDT found this too was in breach of SRA principles.

He also misled a new firm of solicitors instructed by Client A by indicating, against the advice of counsel, that the costs claim had not been settled; Mr Patel said he was concerned that Client A could derail the agreement. In sending misleading and untrue correspondence, he had acted dishonestly, the tribunal said.

The tribunal determined that Mr Patel had put his interests, and the interests of the firm, before those of his client and had ignored a “clear and obvious conflict”. It said his “only focus during the negotiations as regards costs was the maximum settlement” given his direct interest in it.

In relation to another client, Client C, the SDT said Mr Patel not only failed to comply with reasonable requests for costs information, but actively sought a way to refuse them.

Four years into the case, the client reacted with surprise at being told the costs to date were £2.3m, saying he had not been told at the start that they would be so “astronomical”. He asked for detailed timesheets and narratives.

Though recognising in an internal email that the CFA involved required the firm to provide the ‘best information’ about costs, Mr Patel responded to the client that sending a monthly time recording with the brief narrative of the work “is simply going to trigger a monthly debate about costs which we will have to spend more time and costs to deal with which seems a pointless exercise when there is no current liability for those costs”. He also implied that it was not possible to provide details of previous time recording.

Instead, Mr Patel offered to provide “quarterly time recording” but only “upon your specific request, on the basis that you will not treat it as a debate regarding those costs (by way of email or phone call) as we will offer a reduction if there is a ‘win’ and you will have the right to apply for an assessment”.

He did not send the detail requested by the client, who said he had to instruct his own costs specialists because of the breakdown in trust. The firm was shut down three months after the request was made for unrelated reasons.

The tribunal recorded that, during cross-examination, Mr Patel explained that Client C wished to cap costs at £30,000 per month with a full description of the work undertaken, which he would not accept, saying it would be negligent.

“The tribunal found it extraordinary that the respondent would suggest that the client was not entitled, nor was it reasonable for a client to request, that a monthly cap be applied to costs.”

It noted too that he had asked a colleague to go through the CFA “line by line” to see whether the firm was obliged to provide the information requested, and he had recognised in the email that it might be good practice to do so every month. “However, he still sought to avoid doing so.”

After the SRA closed down Neumans, Mr Patel broke further rules by holding himself out to Client C as being “authorised” to discuss costs, when he was not – all costs recovered after an intervention vest in the SRA.

The tribunal upheld other allegations against Mr Patel, including that in response to the SRA asking for an explanation of the costs claim allegations, he called the regulator and threatened to sue the official he spoke to, and promised to “end the SRA”.

Mr Patel also claimed to be “a genius level talent, ultra talent” and that the official was about to experience “global elite level litigation. I am the best litigator in the City and I have trained all the QCs”.

The tribunal concluded that Mr Patel’s misconduct was “deliberate, calculated and repeated over a lengthy period”, and he had failed to show “any insight, foresight or hindsight”.

It was to “his credit that he had taken on matters that other solicitors had not been prepared to take and had worked hard for his clients”. He had previously had an unblemished career.

But, given the serious nature of the misconduct, the SDT struck off Mr Patel and ordered him to pay £30,000 in costs.

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Costs News
Published date
12 Nov 2020

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