A second costs recovery case has been heard in the Court of Appeal in a week as former clients seek to claw back deductions made from their damages by law firms.

The appeal in Karatyz v SGI Legal was heard on Friday as an adjunct to Belsner, which was heard over three days last week before the same panel of judges.

In both Karatyz and Belsner, the claimants are represented by checkmylegalfees, although unlike in Belsner in Friday's hearing it was the former client and not the law firm challenging a High Court decision.

In June 2021, Mr Justice Lavender ruled in favour of Liverpool firm SGI Legal, overturning a district judge’s decision that it was limited to its base costs recovered from third party insurers.

But Robin Dunne, for Karatyz, told the Court of Appeal that Lavender’s decision was ‘extremely detrimental’ to legal services consumers in general and would restrict clients’ opportunities to challenge their solicitor’s bills. ‘The client must have a clear and certain bill and must be able at the outset to make a decision or a determination as to whether to have that bill assessed,’ said Dunne. ‘The problem that arises in this case, as it is in many other cases, is that if bills are not clear then clients are put at a disadvantage.’

SGI’s statute bill was made of £1,717 in basic charges, £260.42 for the success fee and £323 for disbursements. With VAT the total costs were £2,731 (the underlying personal injury claim was settled for £1,250).

The firm recovered £1,116 from the paying insurer and deducted £455 from the client’s damages.

On first instance, District Judge Bellamy awarded the client the costs of her assessment, describing the costs bill as a ‘fairly confusing piece of paper’. Mr Justice Lavender upheld SGI’s appeal, saying that it was ‘not unreasonable for the solicitor to be paid at a reasonable rate’.

Robert Marven KC, for the firm, told the Court of Appeal there were other ways of a client recovering monies they believe they are owed, such as complaining through the firm or to the legal ombudsman. In this case, the client did nothing for two years until she filed a claim through checkmylegalfees.com.

‘At the core of this appeal is whether the court should encourage or discourage Solicitors Act appeals where the client gets absolutely nothing back,’ he said. ‘If the client has actually been overcharged then fair enough, but if the client is not owed any money then should we encourage a pointless exercise with huge amount of costs on both sides?’

Judgment, as with Belsner, was reserved.

 

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