High Court Clarifies Procedural Steps for Solicitors Act Assessments Involving ATE Insurance Disputes

Introduction

In the case of David Richardson and 223 Others v Slater & Gordon UK Limited, the High Court of Justice’s Senior Courts Costs Office, presided over by Costs Judge Rowley, was tasked with determining the appropriate procedural steps for a large number of claimants pursuing Solicitors Act assessments. The case delves into the procedural complexities of handling legal costs disputes and the validity of After-the-Event (ATE) insurance policies in Solicitors Act proceedings.

Key Facts

The claimants, led by Mr. David Richardson, challenged the legal costs they were charged by the defendant, invoking Section 70 of the Solicitors Act 1974. The claims were initially stayed awaiting the outcome of related cases handled by the same defendant, notably Cam Legal Services v Belsner and the Edwards lead case, both of which informed but did not conclusively resolve the current case’s issues.

The claimants mainly disputed the defendant’s handling of ATE insurance policies, including “commission issues,” while the defendant sought to proceed according to standard Solicitors Act proceedings. The crucial point of litigation became whether those commission issues were within the remit of the Solicitors Act proceedings and could be challenged through assessment of the cash account.

Legal Principals

The case of Herbert v HH Law [2019] EWCA Civ 527 is referenced for the principle that challenges to the quantum of ATE insurance premiums are outside the scope of a Solicitors Act assessment. However, Costs Judge Rowley acknowledges that the disputes relating to the ATE policy might inform the determination of the cash account in the present case, assuming such a challenge is related to a breach of fiduciary duty or other alleged misconduct by the defendant.

The court also explores the procedural propriety of handling costs disputes in the Senior Courts Costs Office (SCCO) versus transferring them to the Chancery Division. The case reflects upon the management of similar cases in the past, such as the Claims Direct and Accident Group Test Cases, wherein the SCCO initially tackled the deconstruction of ATE premiums.

Outcomes

Costs Judge Rowley’s judgment clarifies and develops the procedures for such cases. The proposed directions were to engage in standard Solicitors Act assessment procedures first (breakdown of costs, points of dispute, replies), and only afterward provide the claimants with an opportunity to posit their case regarding the “commission issue.” Only then will the possibility of transferring some claims to the Chancery Division be considered.

The decision represented a deviation from the Edwards’ procedure. The judge emphasized the need to avoid duplicative proceedings leading to inefficiency and increased cost, arguing for a step-by-step resolution with a focus on the assessment challenges before addressing those tangential to the ATE policy.

Conclusion

The judgment in David Richardson and 223 Others v Slater & Gordon UK Limited sheds light on the application of Solicitors Act assessments in relation to disputes over ATE insurance premiums and solicitors’ fiduciary responsibilities. It provides direction on how cases involving numerous similar claims should be processed, advocating for a sequential approach that compartmentalizes the assessment of solicitor fees before considering the resolution of issues that may fall outside the standard remit of Solicitors Act proceedings. The court advocates for a streamlined process aimed at achieving justice at a proportionate cost, mindful of the limited scope traditionally afforded to such assessments and the need to avoid confusion and overlap between issues designated for distinct judicial forums.