Court denies pre-LASPO costs as litigation work had not started

A claimant firm that signed up a client days before the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) came in to effect has been denied the chance to recover costs under the old rules.

Irwin Mitchell was instructed to act for the victim of a road traffic accident on 15 March 2013, just two weeks before the start of new civil justice rules.

From 1 April that year, successful claimants were no longer able to recover success fees or after-the-event insurance from the losing party. Ahead of the deadline, extra numbers of clients were signed up by claimant law firms taking advantage of the former climate.

In Choudhury (suing by his litigation friend) v Markerstudy, the County Court at York heard the claim was issued in July 2014 and the claimant accepted the sum of £1,150 in full and final settlement of his claim. When the bill of costs was subsequently submitted and provisionally assessed, defendant firm DWF disputed the figure and requested a detailed assessment of costs.

Irwin Mitchell sought to rely on a collective conditional fee agreement (CCFA) entered into with DWF in December 2011 and contended it provided a valid pre-LASPO retainer. The firm submitted that legal work had started before 1 April 2013 and said the CCFA provided for a 12.5% success fee in the event the case settled.

DWF did not dispute that if litigation services had been provided then the retainer would be valid. But it argued the litigation friend had entered into a post-LASPO agreement and as such the previous arrangement was unenforceable.

DWF said the claimant’s formal bill of costs recorded just one undated routine telephone call prior to 1 April 2013, with a letter subsequently sent in recognition of the call.

It was submitted by the defendant that litigation services were provided from 4 April 2013, the date at which initial steps on the file were considered.

Irwin Mitchell responded that the call fell within the definition of legal services and the arrangement was a clear ‘pre-commencement funding arrangement’.

District Judge Wildsmith ruled that no litigation services were provided to the litigation friend or the claimant before the end of March 2013, and in turn the CCFA was unenforceable.

He assessed the claimant’s bill at nil and ordered Irwin Mitchell to pay the defendant’s costs of £3,000 plus VAT. Permission to appeal was refused.

Senior managing costs adviser Will Mackenzie, who represented the defendant, said the outcome is likely to apply to a large number of pre-LASPO claims where attempts were made to sign claimants up to CCFAs.

He added: ‘According to the judgment of District Judge Wildsmith unless substantive work was done to progress the claim, claimants and counsel are likely to be found to have fallen foul of the relevant regulations and lose entitlement to recover their entire claim for costs.

‘Counsel for the claimant in this case indicated to the DJ that in his view there were likely to be plenty of other cases to which this decision would also apply (whilst it will not necessarily be binding upon those cases).’