Funding – Fees – Liens - Complaints

R (on the application of Malik Law Chambers Solicitors) (claimant) v Legal Complaints Service (the Law Society) (defendant) and Thandie Tobo (interested party): QBD (Admin) (Mr Justice Saunders): 6 May 2010

The claimant firm of solicitors (M) applied for judicial review to quash a decision of the respondent Legal Complaints Service (L) that it had provided inadequate professional services to its client (T), who was involved in the proceedings as an interested party.

In October 2007, T had retained M to pursue an application for indefinite leave to remain on her behalf. The application was successful. Fee negotiations had taken place before the work was done, but T disputed M’s bill of costs, as a result of which M exercised a lien over her file. In March 2008, T complained to L that M’s retention of her documents was preventing her from claiming benefits and that the financial support she was receiving as an immigrant was to cease in a week’s time. L’s caseworker found in May 2008 that M had provided adequate professional services. She stated in a letter to T that the file would be closed unless T provided further information by the end of May. It materialised that T had not received that letter and she was given an extension of time to file further information. The information she filed in July 2008 implied that M had falsified documents in order to justify its fee. A new caseworker appointed by L asked M to deliver up T’s file so that T could obtain her benefits, but M refused, insisting that it was entitled to the lien. An adjudicator appointed by L found that M was being unreasonable in exercising a lien over T’s passport and other documentation that was needed for a benefits claim. She relied upon paragraph 11 of L’s guidance to rule 2 of the Solicitors Code of Conduct, which urged solicitors to exercise caution in a number of ways when considering a lien, and she held that M had thereby provided an inadequate professional service because it had deprived T of around £6,500 in benefits and left her in a very difficult financial position. She ordered M to hand over the documents and to reimburse T her lost benefits by way of compensation for its wrongdoing. M submitted that: (1) a solicitor had an absolute legal right to exercise a lien, that L’s guidance was wrong and that the adjudicator had had no power to order delivery up of the relevant documents; (2) the adjudicator’s decision was unreasonable because she had not given clear reasons to justify it.

Held: (1) The whole basis of the legal complaints procedure was that services provided by solicitors should be of a quality which it was reasonable to expect of them. There could be circumstances where it would be unreasonable to exercise a lien. The mere fact that solicitors had a legal right to exercise a lien did not mean that it could never be unreasonable to do so, nor was there any reason why L should not regulate those occasions; in fact L had the power to do so by virtue of paragraph 2(1)(d) of schedule 1A to the Solicitors Act 1974 if, as should happen, the words of that provision were given their natural meaning. The setting of the standard of what was reasonable was for L’s adjudicator, not for the instant court and it was open to her to have made the finding and given the directions that she did.

(2) The adjudicator had not given adequate reasons for her decision and it was therefore quashed. In order to justify the finding that M had been unreasonable, she would have had to establish that M knew from the outset that retention of the documents would cause T to be deprived of welfare benefits. There was no direct evidence that M knew, and if the adjudicator had reached such a finding, she had not said so in her decision. It was also incumbent on the adjudicator to identify the stage at which retention of the documents became unreasonable and why.

Application granted.

Zane Malik (instructed by Pembrokes) for the claimant; Ben Hooper (instructed by Mills and Reeve) for the defendant.