“In respect of Part 2 the Defendant requests service of the Insurance Certificate and details of the steps taken to comply with paragraph 4 of the Conditional Fee Agreement Regulations, in particular paragraph 4(2)(e). Subject to further information the Defendant reserves the right to further challenge in respect of the Claimant’s retainer and/or additional liabilities claimed in the bill of costs and, refer to the case of Garrett v Halton Borough Council and the court’s determination in respect of an “interest” within the meaning of the CFA Regulations which includes an insurance company panel membership. In the circumstances the Claimant is put to strict proof of an enforceable retainer with his solicitors and subject thereto the Defendant makes no offer in respect of the costs claimed in reliance of (sic, this should I think read on) the conditional fee agreement dated29 September 2004 .”
“Accident Line “Protect”
“(a) The 20 July Attendance Note Maisie telephoned her house insurers and motor insurers who do not provide legal expense cover. She will check the position with her credit card company and let me know. I said that I would accept instructions on a no win no fee subject to hearing from her. Maisie and Harry are not members of a trade union. (b) The 24 September Attendance Note There is no other method of funding available. The car insurance in Maisie’s name and household insurance does not provide legal expense cover. The credit card providers do not have legal expense cover (see previously legal expenses questionnaire already completed). Neither of them have trade union membership. There is no other form of funding. They do not wish to fund this case privately. I am prepared to accept instructions on a No Win/No Fee basis. I recommend Accident Line as legal expense insurers. I have no interest in recommending them. They are however administered by the Law Society and it is my practice to recommend them as a first option.”
“In all the circumstances and on the information currently available to us, we believe, that a contract of insurance with Accident Line Protect is appropriate to cover your opponent’s charges and disbursements in case you lose. This is because: - the cover is comprehensive and designed to meet the financial exposures you are likely to meet if you lose - we receive no commission from this insurance.”
“To issue an Accident Line Protect insurance policy in all eligible CFA cases. To comply with all requirements in the manual or published form Accident Line from time in relation to your delegated authority to issue policies and conduct cases.”
“Accident Line, Abbey Legal Protection Limited, 1st Floor, 17 Lansdowne Road, Croydon, Surrey, CR0 2BX. DX 84219 Croydon 1 We may terminate Your membership by giving one month’s written notice to your registered Practice Office in the following circumstances: • if You are deemed insolvent • if there is an intervention into Your Practice Office by the Office for the Supervision of Solicitors • if for any reason You are suspended from practice by The Law Society • if by your actions, conduct or otherwise You breach any of the conditions of membership including the procedures, responsibilities and duties set out in The Manual.”
“I am happy to recommend Accident Line. I have no interest in recommending them. They are however administered by the Law Society and it is my practice to recommend them as a first option.”
“5. Hence Wiseman Lee have an indirect financial interest in recommending the Accident Line Protect policy namely maintaining referrals from Accident Line. Wiseman Lee failed to disclosure this interest contrary to Regulation 4(2)(e)(ii) of the CFAR 2000 and hence the CFA is unenforceable.”
“89. On behalf of the Law Society, Mr Drabble supports Mr Bacon in submitting that the judge was wrong to hold that Websters were in breach of reg 4(2)(e)(ii). He advances a number of arguments. First, he submits that the word “interest” in reg 4(2)(e)(ii) should be construed narrowly so as to mean only a direct financial interest such as commission (a direct profit arising from the payment of the premium). He acknowledges that the Lord Chancellor’s consultation paper of February 2000 purported to “draw on the example of the Solicitors’ Client Care Code” to require the legal representative “to provide explanations of the different possibilities open to the client on the insurance front”: see para 29 of Hollins v Russell. This part of the paper concluded, at para 83: “if the legal representative recommends a particular product, but also has an interest in doing so, for example because he or she will receive a commission or is a member of the insurer’s panel of solicitors, then this must be disclosed to the client”
“But the crunch averment in the points of dispute was that failure to comply with recommending the NIG policy would lead to termination of panel membership, and I accept from the lack of response to that direct matter that it is a proper inference that in fact it would have done so, in the sense that the claimant solicitors, Websters, recommended to some clients to go elsewhere for their ATE insurance, then they would have been taken off the panel, or, as the deputy district judge put it slightly differently, “I am not satisfied that the claimant has established that the claimant solicitors have no interest in recommending this policy”
“83. In addition to ensuring the client is made aware of his potential liability for costs the new regulations will draw on the example of the Solicitors Client Care Code to require the legal representative to explain how a client’s liability might be minimised through the use of insurance cover, including explaining whether the client’s liability for costs (including the costs of the party) may be covered by insurance, the types of insurance products which are available, and why he or she thinks a particular type of product might be suitable to the client’s needs. If the legal representative recommends a particular product, but also has an interest in doing so, for example because he or she will receive a commission or is a member of the insurers panel of solicitors, then this must also be disclosed to the client.”
“99. The statement that Websters had no interest in the insurance premium “although we are on the AA Panel” did not disclosure to Ms Garrett that Websters had a financial interest in remaining on the panel which would be lost if she did not accept their recommendation that she enter into an ATE with NIG. She could not have known from what she was told that Websters were recommending the NIG policy because this was dictated by their financial interests. 100. She would not have understood the significance of Websters being of the Ainsworth panel. As Mr Morgan suggested in argument, most laypersons would be likely to believe that membership of a panel was a mark of quality control. This is borne out by the evidence of Chris Ward, who is managing director of Abbey Legal Protection. He explains that Accident Line is a scheme managed by Abbey Legal Protection on behalf of the Law Society. It is a membership scheme for which firms pay a fee in return for a range of services, including referrals. Membership is based on quality criteria, one of which is that solicitors must have an individual member of the Law Society’s Personal Injury Panel in their office. 101: At para 90 of Hollins v Russell, the court recorded the submission of Mr Drabble that the statutory regulation had two distinct aims. The second, he submitted, was “to protect the client – to ensure so far as possible that she understands what she is letting herself in for and is able to make an informed choice amongst the funding options available to her”
“Where he speaks of the question which he has to decide in reference to certain articles as a question of whether they were so trifling in value or amount as to be negligible.”
“If this be wrong, and if the Act is to be construed literally, I would say that this discrimination is perfectly harmless. If need be, I would apply the maxim de minimis non curat lex, but to my mind that is quite unnecessary. I cannot think that this is discrimination within the Act, certainly not unlawful discrimination. I think the appeal should be allowed.”
“But even if we were wrong on both those points, it seems to me that this is manifestly a case to which the rue de minimis non curat lex must be applied. One is dealing with no more than five minutes each day, and I desire to stress that under the ceasing work provision all employees of both sexes cease work at the same time and are entitled to prepare themselves to leave, and it is only the actual step of leaving the premises in which there is any difference at all. For these reasons I entirely agree with Lord Denning MR that this appeal should be allowed.”
“10(1) Solicitors shall account to their clients for any commission received of more than£20 unless, having disclosed to the client in writing the amount or basis of calculation of the commission or (if the precise amount or basis cannot be ascertained) an approximation thereof, they have the client’s agreement to retain it. (2) Where the commission actually received is materially in excess of the amount or basis or approximation disclosed to the client the solicitor shall account to the client for the excess.”
“WHAT IS THE SIGNIFICANCE OF THE£20 FIGURE IN THE RULE? The£20 figure set out in the rule attempts to define for practical purposes what would be acceptable in law as being de minimis.”
“(6) A director need not declare an interest – (a) if it cannot reasonably be regarded as likely to give rise to a conflict of interest; (b) if, or to the extent that, the other directors are already aware of it (and for this purpose the other directors are treated as aware of anything of which they ought reasonably to be aware); or (c) if, or to the extent that, it concerns terms of his service contract that have been or are to be considered – (i) by a meeting of the directors, or (ii) by a committee of the directors appointed for the purpose under the company’s constitution.” (a) if it cannot reasonably be regarded as likely to give rise to a conflict of interest; (b) if, or to the extent that, the other directors are already aware of it (and for this purpose the other directors are treated as aware of anything of which they ought reasonably to be aware); or (c) if, or to the extent that, it concerns terms of his service contract that have been or are to be considered – (i) by a meeting of the directors, or (ii) by a committee of the directors appointed for the purpose under the company’s constitution.”
“But the crunch averment in the points of dispute was that failure to comply with recommending the NIG policy would lead to termination of panel membership, and I accept from the lack of response to that direct matter that it is a proper inference that in fact it would have done so, in the sense that the claimant solicitors, Websters, recommended to some clients to go elsewhere for their ATE insurance, then they would have been taken off the panel, or, as the deputy district judge put it slightly differently, “I am not satisfied that the claimant has established that the claimant solicitors have no interest in recommending this policy”
“64. In my judgment the conclusion is inescapable. At the relevant time (April 2003) BLA were receiving 95% of their work from Ainsworth. They had to comply with the Operations Manual, and, where disbursement funding was required, had to recommend the NIG policy. Ms Cunliffe thought the NIG policy was the best available in any event, but it is beyond doubt that her interest in keeping the profitable joint venture going meant that she and her firm had a declarable interest in recommencing the NIG policy. There may have been occasions when a disbursement funding loan was not required, when other policies of insurance were used. It is possible that BLA had a declarable interest in respect of those other policies, because they were entitled to receive commission. Although it was argued that it was possible to use a different policy where disbursement funding was provided by HBoS, it seems that no other policy was ever recommended. In my view, therefore, BLA did have a declarable interest in recommending the NIG policy, even if the reason for the recommendation was that it was the best policy on the market, rather than they were forced to do so under the terms of the Operating Manual, but, as the Court of Appeal has pointed out, the profit generated by cases is likely to be of greater significance to solicitors than commissions paid on insurance premiums. ”
“31. It is submitted that any breach was not material in the Hollins sense, for the following reasons: (a) The size of the interest must also be relevant to the issue of materiality: the greater the undeclared interest, the more consumer protection is undermined. Given the size of the financial interest in this case, any breach in not declaring it can properly be described as “literal, but trivial” (see Garrett at [31]). (b) The “protection” afforded to the Claimant by knowing of such a tiny interest in the choice of premium was negligible in any event. The purpose of the protection is to avoid a claimant taking out a bad insurance policy and to enable him to make an informed choice (see Garrett at [101]). However, in this case, the firm’s financial interest in the policy could not conceivably have been a factor which the Claimant would have taken into account when deciding whether to take out the premium. Much more important to him would have been that: (i) He had used the solicitors in the past and trusted their judgment. The likelihood is that he would have followed any recommendation made to him whatever the circumstances. (ii) He had made a personal injury claim in the past using the very same premium (see paragraph 5 of Mr Wershof’s statement at p.44). (c) Therefore there was no materially adverse effect on the protection afforded to the Claimant by Reg 4(2)(e)(ii). Neither was there a materially adverse effect on the administration of justice generally.” (a) The size of the interest must also be relevant to the issue of materiality: the greater the undeclared interest, the more consumer protection is undermined. Given the size of the financial interest in this case, any breach in not declaring it can properly be described as “literal, but trivial” (see Garrett at [31]). (b) The “protection” afforded to the Claimant by knowing of such a tiny interest in the choice of premium was negligible in any event. The purpose of the protection is to avoid a claimant taking out a bad insurance policy and to enable him to make an informed choice (see Garrett at [101]). However, in this case, the firm’s financial interest in the policy could not conceivably have been a factor which the Claimant would have taken into account when deciding whether to take out the premium. Much more important to him would have been that: (i) He had used the solicitors in the past and trusted their judgment. The likelihood is that he would have followed any recommendation made to him whatever the circumstances. (ii) He had made a personal injury claim in the past using the very same premium (see paragraph 5 of Mr Wershof’s statement at p.44). (c) Therefore there was no materially adverse effect on the protection afforded to the Claimant by Reg 4(2)(e)(ii). Neither was there a materially adverse effect on the administration of justice generally.”