A London law firm has lost an appeal over the assignment of a now-deceased client’s claim to his solicitors, with the Court of Appeal confirming that ‘a solicitor acting for a client in legal proceedings may not validly take an assignment of the client’s cause of action prior to judgment’.

Commercial firm Candey asked the court to ‘develop’ the common law of champerty so that assignments to solicitors are permitted where it would not ‘enlarge the benefit they would otherwise have received’.

Muhammed Haque QC, for Candey, urged the Court of Appeal to ‘make new law and remove the medieval shackles of champerty from legitimate solicitor-client agreements’ at a hearing last week.

He argued that the introduction of damages-based agreements and conditional fee agreements through the Courts and Legal Services Act 1990, as well as the growth of litigation funding, means that ‘lawyers are now as much commercial parties in litigation as they are officers of the court’.

The law should therefore ‘treat Candey as being commensurate to a commercial party who possesses a genuine commercial interest in a claim’, Haque told the court.

However, the firm’s appeal was unanimously dismissed last week, with the Court of Appeal rejecting the argument that it was ‘no longer contrary to public policy’ to prevent assignments of claims from a client to their solicitors.

Lord Justice Arnold said: ‘This court is bound by its previous decision in Pittman v Prudential that a solicitor acting for a client in legal proceedings may not validly take an assignment of the client’s cause of action prior to judgment.’

The judge also said that the court is also ‘bound by previous decisions … that a champertous agreement not sanctioned by the 1990 act remains contrary to public policy and is therefore unenforceable’. ‘Even if it was open to this court to depart from the previous authorities, I would not do so,’ he added.

Arnold held that the 1990 act is ‘explicit’ that damages-based agreements and conditional fee agreements that do not comply with all the relevant conditions are unenforceable.

‘It is no answer to this point that the assignment is neither a conditional fee agreement nor a damages-based agreement,’ the judge concluded. ‘What section 58(1) and section 58AA(2) [of the 1990 act] show is that parliament, being well aware of the common law rules, decided to go so far towards relaxing them as sections 58 and 58AA provide and no further.’

 

This article is now closed for comment.