Published April 7, 2013 by Cost Lawyer
Solicitors who pay their client’s disbursements to progress their cases cannot be liable for a third-party costs order, the Court of Appeal ruled yesterday.
The conjoined cases of Germany v Flatman and Barchester Healthcare v Weddall  EWCA Civ 278 were both run under conditional fee agreements without after-the-event insurance. In the High Court in late 2011, the defendants’ common insurer, who had queried whether the claims were being funded to some extent by the solicitors Law costs draftsman, successfully appealed a refusal to grant disclosure of the conditional fee agreement and funding arrangements.
The Law Society intervened at the Court of Appeal stage. The Court of Appeal judge Lord Leveson said yesterday that he agreed with the Society that payment of disbursements, ‘does not incur any potential liability to an adverse costs order’.
Lord Justice Leveson dismissed the suggestion that after-the-event insurance is a pre-requisite of bringing a claim on a conditional fee agreement. He said: “It is, however, a comparatively straightforward matter to deal with. The Law Society makes it clear that if solicitors have agreed to indemnify their client (as is entirely lawful) the solicitors could not then seek to deny the existence of that indemnity or prevent their client from relying upon it.”
The Law Society stated that the ruling will enable solicitors to address problems that their clients face in funding meritorious claims. Law Society president Lucy Scott-Moncrieff stated: “These type of fee arrangements assist access to justice for litigants who cannot afford to bring the litigation themselves, often in the field of housing law, personal injury and trade union cases and are particularly important in a climate where so many cuts have been made to public funding. Measures like this have been adopted by solicitors to facilitate access to justice and they would be acting under such circumstances only where they viewed the claim as being likely to succeed.”