Appeal overturns 'Checkmylegalfees' PI costs victory

Solicitors have won the latest round in the long-running court battle with former clients seeking to recover costs deducted from damages.

Mr Justice Lavender ruled in favour of Liverpool firm SGI Legal after it appealed a decision to limit its base costs to those recovered from third party insurers.

The judge ruled that the limitation decision of the lower court was wrong and that the firm was entitled to charge its former client £455.50.

The decision in SGI Legal LLP v Karatysz is the latest in a series of cases in which individuals have brought successful RTA claims and then sought an assessment of their solicitors’ bill of costs. This ruling is set to have wider consequences, with a number of similar appeals pending the outcome and more similar cases also waiting to go before District Judge Bellamy (whose decision was being appealed) in the Sheffield District Registry of the High Court. The saga may go on, though, as an appeal is likely from the former client.

The underlying dispute was over an accident in 2016 where the claimant sustained injuries including whiplash. She instructed SGI Legal a few months later, and the judgment reproduced the firm’s client care letter in full which set out the aim that no more than 25% of damages would be deducted for costs. The third party insurer paid damages of £1,250 plus fixed costs and disbursements of £1,116 including VAT.

SGI Legal paid the client £794.50 – her damages minus £455 made up of the 25% success fee and £143 ATE insurance premium. She later instructed checkmylegalfees.com Limited to seek a bill of costs, which stated that the PI claim had been dealt with by Grade D fee earners on £161 an hour.

On the appeal, it was submitted by the former client that the terms of the CFA stated that the amount that could be recovered from her damages was limited to 25%. Lavender J said this was ‘an aspiration rather than a commitment’.

The judge noted that the client had not agreed to the firm doing 11 hours’ work and being paid at £161 per hour, so the question of whether she gave informed consent did not arise. But he said it did not follow that it was appropriate to limit the firm’s base costs to the amount recovered from the insurer.

He added: ‘Assuming that it was reasonable for the work to be done (and there was no challenge to the district judge’s decision that it was reasonable for nine hours’ work to be done), it is not unreasonable for the solicitor to be paid for that work at a reasonable rate.’

The judge ruled that the original decision had been wrong and the firm was entitled to charge the client the £455.50.

Following the ruling, Mark Carlisle, consultant with checkmylegalfees.com, said: 'The judgment is further helpful reinforcement of the importance of informed consent, and it is notable that Mr Justice Lavender found that the district judge could, with good reason, have arrived at the fixed costs figure as a reasonable amount for base costs. It is obviously disappointing that he found in this particular case that the district judge had not set out good reason for his decision to do just that.

'It is highly likely that an application for permission to appeal to the Court of Appeal will be made.'