Judgment in Sellers v. Simpkins Clarifies Application of Overall Cap in Termination of Conditional Fee Agreements

Introduction

The case of Helen Sellers v. Steven Simpkins before the Senior Costs Judge Gordon-Saker addresses the intricacies surrounding a conditional fee agreement (CFA) and what happens to the costs owed when a CFA is terminated before the case is concluded. The judgment delves into whether an “overall cap” on the solicitor’s fees applies upon termination by the client and how this impacts the final costs recoverable. The case also provides guidance in interpreting the Law Society conditions in conjunction with CFAs, particularly when navigating the interplay between client termination and the solicitor’s entitlement to costs.

Key Facts

The claimant, Helen Sellers, was represented by the defendant, solicitor Steven Simpkins, under a conditional fee agreement dated 21st May 2015, after being seriously injured in a road accident. In March 2021, the claimant terminated this retainer and solicited new representation. Subsequently, the claim settled globally inclusive of costs, without a breakdown provided or recovered from the opponent specifically attributed to the defendant’s costs. Despite this, the defendant served a detailed bill of costs totaling £496,983.96, of which £448,983.96 remained unpaid after accounting for an interim payment. The claimant challenged the bill under s.70(2) Solicitors Act 1974.

Legal Principles

The pivotal legal question was whether the termination of the CFA limited the defendant’s entitlement to costs in excess of those recovered from the opponent in the underlying proceedings. The answer rested upon the interpretation of the CFA “overall cap” on liability for costs, as established by the conditions of the Law Society and incorporated by the agreement itself.

The court relied heavily upon the principles derived from “Higgins & Co Lawyers Ltd v. Evans [2019] EWHC 2809 (QB)” where Saini J. interpreted a similar provision, concluding that the overall cap did not apply where the agreement ended before the client won the case. This was because a cap calculated by reference to damages received could not logically apply in circumstances where liability to pay solicitor’s costs arises before the conclusion of a claim for damages.

Building on the legal principles from Higgins, the court differentiated between two possible scenarios upon client termination of a CFA: immediate payment of the solicitor’s charges or awaiting the outcome of the claim to determine the costs liability. The ruling in Higgins suggested that the cap was only operable in the event of a “win.” Therefore, any election for immediate payment before a win would preclude the application of the overall cap.

Outcomes

The court concluded that the overall cap pertaining to costs did not apply in the Seller v. Simpkin case because the solicitor made the decision to terminate his services before the outcome of the claim was decided and elected to seek payment of costs immediately. The judge ruled that the solicitor had effectively “stuck,” meaning they opted not to wait for the conclusion of the claim to recover costs.

However, for the sake of completeness, the court also considered what the overall cap might have been if it were to apply. The defendant had suggested a cap based on the total value of costs presented at settlement negotiations, while the claimant argued for a lower amount based on costs previously agreed upon. The court favored the defendant’s approach in this hypothetical exercise.

Conclusion

The judgment in Sellers v. Simpkins reinforces the legal principle from Higgins that the overall cap on costs in a conditional fee agreement does not extend to scenarios where the solicitor elects for immediate payment upon termination by the client before a claim is won. When interpreting standard Law Society conditions in CFAs, it is crucial to consider the intention and actions of solicitors post-termination in determining the applicability of any costs cap. For legal professionals, this case offers an essential review of the implications of client-terminated CFAs on subsequent cost recoveries and the importance of explicit elections for cost payments in such agreements.