Will the appeal court turn its nose up at the sale of PI cases?

Just last week the Gazette reported on the ‘merger mania’ going on in the personal injury world.

But while firms may be jostling to buy and sell cases in a noisy marketplace, when it comes to pre-Jackson caseloads, the true value of the goods is very difficult to work out – because we still have no Court of Appeal ruling on whether or not conditional fee agreements can be validly assigned.

If they can be, as suggested by the old High Court case of Jenkins, then each of those files will be far more precious, as it will contain a glistening recoverable success fee, not to mention a recoverable after-the-event insurance premium.

But if the Court of Appeal decides that Jenkins was just plain wrong; or that its particular circumstances – in which a client had faithfully followed their trusted solicitor to a new firm – are simply too far removed from the practice of hundreds of files being sold from one law firm to another – then those cases are worth an awful lot less.

This issue cropped up again this month in the Senior Courts Costs Office case of Azim v Tradewise Insurance, where Master Leonard found that the transfer of a retainer between two firms had in fact been valid.

He held that following Jenkins, it was not necessary to show ‘a relationship of personal trust and confidence between a particular solicitor and a particular client’ before a retainer could be validly assigned.

But what will the Court of Appeal make of it? All eyes are on the Budana case on this issue, which is being leapfrogged to the appeal court.

Looking at the broader impact, if the Court of Appeal rules against the valid assignment of CFAs, this will effectively be a windfall for defendants, who will have benefitted from the mere fact that the case was transferred between claimant firms.

It will be a blow to the larger claimant practices that have taken on these pre-Jackson caseloads.

But one wonders how sympathetic the courts will be to any impact on the claimant legal sector. Judges tend to frown upon the buying and selling of case files – even though the transfer of the file may well be in the best interests of the clients involved.

Even in the Budana case, in which DJ Besford did hold the assignment to be valid on the basis that Jenkins clearly permitted the transfer of a CFA between firms, the district judge commented that the circumstances of Jenkins were far removed from ‘the commercial wholesale disposal of clients’ - as he put it - that had taken place in Budana.

The economic realities of the personal injury sector may make the transfer of files to larger practices a perfectly sensible approach, and often a necessary one.

But that doesn’t mean that the Court of Appeal will not take the opportunity to show its distaste for it.

Rachel Rothwell is editor of Litigation Funding magazine