Elstone v Knowles [2007] EWHC 90089 (Costs)

Case No 6WT05402SCCO Ref: CCD 0704180IN THE HIGH COURT OF JUSTICESUPREME COURT COSTS OFFICEVenue Clifford’s Inn, Fetter LaneLondon, EC4A 1DQDate 21st November 2007
Before
DEPUTY MASTER ROWLEY
Between
WILLIAM ELSTONEClaimantBRETT KNOWLESDefendant
Mr T. Powell for ClaimantMr D. Stacey instructed by Keelys Solicitors DefendantHearing Hearing date: 6 September 2007
JUDGMENT

The issue

[1]The issue before me is whether or not the claimant’s solicitors have complied with Regulation 4(2)(e)(ii) of the Conditional Fee Agreement Regulations 2000 by informing the claimant of any interest they have in recommending the claimant’s purchase of after the event insurance (ATE) from Accident Line Protect (ALP).[2]If the claimant’s solicitors failed to comply with that regulation, was the departure sufficient to have a materially adverse effect on the protection afforded to the claimant or on the administration of justice so as to render the CFA unenforceable?[3]The relevant part of the Regulation is as follows:
“4(1)Before a conditional fee agreement is made the legal representative must – (a) inform the client about the following matters… (2) Those matters are… (e)whether the legal representative considers that any particular method or methods of financing any or all of the costs is appropriate, and if he considers that a contract of insurance is appropriate or recommends a particular such contract… (ii) whether he has an interest in doing so.”

Background

[4]On the 12th February 2004, the claimant was crossing the Brixton Road in South London when he was knocked down by the defendant’s motorcycle, rendering him unconscious.[5]He sustained a fracture to the skull, giving rise to a mild brain injury from which he recovered, together with fractures to bones in his left leg and right wrist. He was kept in hospital for a month before being discharged to the full time care of his wife who gave up her job in order to do so. The claimant was aged 78 at the time of the accident.[6]In order to bring a claim against the defendant, the claimant telephoned the Law Society to request information about solicitors near to his home in Brixton. The Law Society provided the name of Powell Forster (possibly amongst others) whose offices were 10 minutes walk away from the claimant’s house.

Proceedings

[7]Mr Powell of Powell Forster visited the claimant at home on the 19 April 2004 to take instructions. Thereafter, following a protracted pursuit of the police accident report, a letter of claim was sent to the defendant and the defendant’s insurers, Norwich Union, responded with a denial of liability. Given the absence of any recollection of the accident circumstances by the claimant himself, the claimant’s solicitors obtained lay witness evidence from the witnesses recorded by the police and expert evidence from an accident reconstruction expert regarding, amongst other things, the speed at which the motorcycle was travelling at the time of the collision.[8]Proceedings were commenced on the 8th December 2006 alleging negligence on the part of the defendant. A defence and counterclaim was served on the 23rd January 2007 alleging the claimant had stepped out on the pedestrian crossing in the face of a red light against him and thereby caused damage to the defendant’s motorcycle in the sum of £4,500.[9]The claimant made a Part 36 offer upon the commencement of proceedings and after a period of negotiation with the defendant, the claim settled at the allocation stage on the 19th March 2007 for the sum of £8,937.50 with the counterclaim being dismissed. The defendant agreed to pay the claimant’s costs to be assessed by detailed assessment if not previously agreed.[10]A Notice of Commencement was served by the claimant on the 21st May 2007. Points of Dispute were served on the 14th June and a Reply on the 27th June. The claimant requested a detailed assessment hearing on the same day as serving the Reply.[11]The Points of Dispute raised a number of preliminary points in addition to the point identified in paragraph 1 of this judgment. They were all characterised by the claimant’s solicitors in the Reply as either being a ‘fishing expedition’ or being ‘routine’ points which were not specific to the facts of the case. All requests within the Points of Dispute for disclosure of documentation were refused in the Reply. Documentation requested included the Conditional Fee Agreement (“CFA”) itself and the terms of the agreement between the claimant’s solicitors and ALP.[12]Shortly before the detailed assessment hearing, the defendant filed and served a skeleton argument in relation to the point in issue. The claimant filed and served a skeleton in reply, together with a witness statement from Mr Powell. The claimant’s skeleton argument centred on the issue before me, but the witness statement also dealt with other matters such as the existence of other legal expense insurance available to the claimant.

The evidence of Mr Powell

[13]Mr Powell’s witness statement described the conversation he had with the claimant when discussing the need for ATE insurance in the absence of any other insurance cover as follows:- 7. ‘I also discussed with him the need for insurance and the particular contract of ATE insurance which my firm recommended. I confirm that I gave Mr Elstone the information printed on my firm’s standard attendance note; i. ‘in your case, we consider that before any court proceedings are issued, you must take out an insurance policy to protect you against the risk that you will have to pay the other side’s costs; we are members of Accident Line Protect, the only insurance scheme recommended by the Law Society. If we take on your case, it is a condition of Accident Line Protect that we issue an insurance policy at the very beginning of your case; the Accident Line policy will provide you with at least £100,000 worth of cover – more than enough for most actions…we have no financial interest in making this recommendation.’ 8. ‘I went on to give him our reasons for recommending the Accident Line insurance policy, namely that the insurer is approved by the Law Society, has a well established proven track record, that the policy is underwritten by a large insurance company, the premiums are reasonable compared with other insurance schemes and the level of cover is adequate for Mr Elstone’s needs.’ 9. ‘Having discussed all of this with Mr Elstone, he agreed that he would sign a CFA and would take out ATE insurance.’ 10. ’Having given all of this information verbally, I then wrote to Mr Elstone on 20 April 2004. I enclosed a copy of the CFA for Mr Elstone to sign and return to me. Mr Elstone did this and the CFA was dated 22 April 2004. I went on to issue an Accident Line Protect ATE policy on about 26 April 2004.’ During the course of the hearing itself, Mr Powell produced a second witness statement. Counsel for the defendant objected to its late production, but I allowed it to be admitted and Mr Powell was cross-examined upon its contents by the defendant’s counsel. The statement itself is short and the two substantive paragraphs are as follows:- 2. ‘Powell Forster is a small two-partner personal injury and housing practice in South London. Our work has predominantly been legal aid housing work, mostly for public sector tenants. However, a small part of our work relates to personal injury cases. 3. ‘Since 12 November 2003, my firm has opened 292 cases of which 75 are personal injury cases and 15 were referred to my firm by Accident Line Protect. This means that 20% of our personal injury files were referred by ALP, all of the others coming from other sources, either direct contact or referral by other solicitors or advice agencies, but a mere 5.14% of all work carried out in the past 3½ years is work referred to us by ALP.’[14]Under cross-examination, Mr Powell confirmed that he had obtained the information contained in his witness statement from a search of his firm’s computer system. He had not done a search for information to indicate the proportion of the firm’s new instructions that were files referred by ALP.[15]He said that all three fee earners in his firm charged £200 per hour in CFA cases. Where costs were paid by the Legal Services Commission – in both housing work and personal injury cases – between the parties’ costs were recovered at the higher rate where the cases were successful. If they were not, then the legally aided cases were paid at the lower rate and those under CFA arrangements produced no fees at all. Given the variability of the outcome of cases and the fees that would be generated depending upon the various outcomes, Mr Powell was unable to say whether the personal injury or housing work was the more profitable.

The evidence of the Powell Forster website

[16]In addition to the two statements of Mr Powell, the only other evidence provided by either party was a page printed from the Powell Forster Solicitors website (3 pages from the ALP website were also put forward, but were not referred to at any point).[17]The page from the Powell Forster website, under the heading ‘No Win No Fee’ agreements, contained the following text regarding Powell Forster’s relationship with ALP ‘In personal injury cases, we will arrange legal costs insurance for you at the very outset of your case. This will protect you against having to pay your opponent’s costs if you lose your case at trial. The premium for this insurance is reasonable and you will only have to pay it, if you win your case. We are members of Accident Line Protect, the only delegated insurance scheme approved by the Law Society. We insure all eligible personal injury claims with this scheme.’

Evidence set out in the Myers case

[18]The claimant’s skeleton argument stated in paragraph 18 that details of the ALP scheme were set out in Myers -v- Bonnington (Cavendish Hotels) Limited [2007] EWHC 90077 (Costs), a decision of Master Rogers, and as such were not repeated in that skeleton argument ‘since the scheme details are largely the same.’ Both parties’ advocates referred to the evidence of Mr Wershof, the claimant’s solicitor who had conduct in that case, as recorded by Master Rogers. It seems legitimate therefore for me to have regard to what is said in the decision in Myers regarding the ALP scheme.[19]From paragraph 41 of the Myers judgment, I understand Mr Wershof’s evidence in that case to be as follows:-(a) Accident Line was set up in 1995 as an alternative method of financing legal proceedings to legal aid.(b) The scheme is managed by Abbey Legal Protection an FSA authorised insurance intermediary.(c) It is said to be a’ membership scheme’ not a ‘panel’ arrangement.(d) The Accident Line referral service began on 1st October 2000 as “as an additional benefit for Accident Line members.”(e) Membership of a panel meant that after the event insurance could be issued on a delegated authority basis.(f) Wiseman Lee’s membership would have continued regardless of the referral scheme.(g) The membership of Accident Line includes additional services such as access to practice funding; marketing support services, information and training; and ‘referrals at no additional cost.’(h) Unlike claims management companies, there is no contractual relationship at all with an injured person who may make contact with the Accident Line call centre.(i) The call centre will take details from the injured party and then send the information gathered on to the nearest member solicitor. It acts as a signpost to the most appropriate level of specialist solicitor. No fee is paid or payable to Accident Line by the member solicitor for an individual referral.(j) There is no contractual obligation to insure referrals or even to accept them, only to give independent advice on both the merits of the case and funding options in accordance with the Accident Line ‘standards charter’.’(k) 0.1% of all cases opened by Wiseman Lee were referred from ALP(l) Less than 4% of personal injury claims opened were referred by ALP

The appropriate test

[20]Mr Stacey, for the Defendant, submitted that Mr Powell’s assertion in paragraph 7 of his witness statement that his firm had no interest in recommending ALP (as opposed to saying that they did have an interest but had disclosed it) placed the essential facts of this arrangement on a par with those set out in paragraph 82 of Garrett -v- Halton Borough Council [2006] EWCA Civ 1017.[21]Mr Stacey then referred me to the 4 issues that were raised originally before Judge Stephen Stewart QC and which the Court of Appeal subsequently dealt with in Garrett. He said that the third issue was irrelevant to the facts of this case, but the other three issues were the ones on which I needed to make a decision in this case. Suitably amended they are as follows:-(1) Did Powell Forster have an interest which they were required to disclose to their client?(2) If yes, did Powell Forster disclose it?(3) If there was a failure to disclose in accordance with Regulation 4(2)(e)(ii), did that failure have a materially adverse effect on the protection afforded to Mr Elstone or on the administration of justice so as to render the CFA unenforceable?[22]For the claimant, Mr Powell’s primary submission was that in order for me to consider any challenge by the defendant to the CFA, the defendant had to demonstrate that there was a ‘genuine issue’ and in order to do that, he had to adduce some evidence to the court.[23]In support of this submission, Mr Powell referred me to paragraph 79 of Garrett which in turn referred to paragraph 81 of Hollins. The point in both cases was ‘that the court should not require further disclosure unless there is a genuine issue as to whether there has been compliance with Regulation 4.’[24]I queried whether the genuine issue in those paragraphs was of any wider application than simply in relation to a paying party’s request for disclosure over and above the CFA (see paragraph 71 of Hollins.) In response, Mr Powell submitted to me that if there was no need for the genuine issue threshold, then it would open the floodgates to such arguments being argued in every case.[25]Neither advocate was able to point me to any use of the phrase ‘genuine issue’ outside of the context of additional disclosure. It seems to me that the test referred to in Garrett is the one to adopt in a discrete aspect of detailed assessment proceedings, namely additional disclosure in a particular case. In order to justify that additional disclosure, the paying party has to persuade the court that the boundaries of the receiving party’s privilege in relation to his documents needs to be altered in the particular case.[26]Mr Powell stated that the court should start with the signature on the bill and in the absence of any evidence to the contrary to support the defendant’s contentions, the court should say that a challenge to the CFA should go no further. It was not for the claimant to provide evidence for a defendant to use. The redacted CFA that the claimant had disclosed (as an exhibit to Mr Powell’s witness statement) merely showed the client and his solicitor had signed the CFA in order to support the signature on the bill of costs.[27]The Court of Appeal in Hollins dealt at length with the difficulty in accepting the receiving party’s signature on the bill of costs in CFA cases. The complexities involved in complying with the legislative requirements means that the court cannot use the signature on the bill as the starting point in such cases.[28]I reject the claimant’s ‘genuine issue’ test and prefer the three stage test taken from Garrett and proposed by the defendant. Whilst the paying party may need to produce something to the court to rebut a presumption, for example, that there is a retainer at all, it seems to me that there is no ‘genuine issue’ threshold generally for matters that are placed in points of dispute. The paying party is free to take whatever points he wishes to put before the court. If they are without merit, the court will deal with them appropriately, which well mean additional costs being incurred by the paying may party as a result.

Did Powell Forster have an interest in recommending the ALP policy?

[29]Mr Stacey submitted that if the claimant’s solicitors had not recommended the ALP policy, they would be taken off the panel of solicitors. He said that this submission was not disputed in the Reply or the claimant’s skeleton argument or witness statement. Mr Stacey drew a parallel with paragraphs 97 and 98 of the Garrett decision where a similarly ‘crunch averment’ had not been challenged by the receiving party’s advocate before the Court of Appeal.[30]Mr Powell referred to paragraph 14.(c) of his skeleton argument which stated that:- ‘Powell Forster are not required to insure ALP referrals, whether by contract or otherwise, or even to accept them. Any obligation to insure comes only after Powell Forster have taken on the case on a CFA, but the client is not obliged to instruct us on a CFA basis. Referring back to the points of dispute, the simple answer is that Powell Forster are not ‘required to recommend purchasing the ALP ATE insurance in return for the continued referral of cases to the solicitor.’[31]It is clear from the previous paragraph that the point was in fact disputed by the claimant in his skeleton argument.[32]I do not accept Mr Stacey’s submission that I can draw any conclusion from the absence of a Reply to the specific point in the Points of Dispute. Replies are optional according to Rule 47. 13. Moreover, if the claimant, in the underlying proceedings, had not served a Reply to Defence he would not have been taken to have admitted anything in that Defence (see CPR 16.7(2)) and so to suggest that I should make some adverse finding cannot be right. In Garrett, Mr Bacon for the claimant was appearing before the Court of Appeal on a second appeal. Whether or not it was appropriate for Mr Bacon to have challenged the findings of Judge Stephen Stewart QC, it does not seem to me that the Court of Appeal were seeking to lay down any binding authority on this point. It was simply dealing with the facts before it in that particular case.[33]Mr Stacey then referred to paragraph 96 of Garrett in support of his contention that an indirect financial interest, for example, being on an insurers’ panel, was just as relevant as a direct financial interest such as a commission when an insurance policy is sold.[34]He pointed to the number and percentage of cases received from ALP as set out in Mr Powell’s second statement and elaborated upon under cross examination. He submitted that these were sufficient to establish a genuine interest in avoiding being taken off the ALP panel.[35]Mr Powell’s submission was that there was a very clear dividing line between the high volume business dependency arrangement set out in Garrett and the Accident Line delegated authority membership scheme which existed to provide ATE insurance. To reflect this distinction, Mr Powell referred to the fact that the word ‘dependent’ is used regularly to describe the relationship in Garrett and that the number of referrals there was described as ‘not insubstantial’.[36]In Mr Powell’s submission, the phrase ‘no financial interest’ as referred to in his standard attendance note meant that no commission was paid. That is what Mr Powell understood by the phrase and that is what everybody understood the phrase to mean prior to Garrett. It was crystal clear to the claimant that it would be a condition of him instructing Powell Forster Solicitors that he would need to purchase Accident Line Protect insurance once he signed a CFA.[37]Mr Powell told me that his firm had no dependency on the Accident Line Protect scheme. His firm was a member because he wanted to offer insurance in the most pain-free manner possible. The amount of referrals received were negligible; they were ‘a dribble’, although his firm were grateful for them. His firm would continue to work with ALP even if the cases dried up entirely.[38]In Garrett, the Court of Appeal made it clear that the obligation on the solicitor to inform the client whether the solicitor had an interest in recommending a particular insurance policy is not to tell the client whether the solicitor believes he has an interest in doing so, but it is to inform the client whether the solicitor has an interest in doing so in fact (see paragraph 94).[39]In my judgment, the defendant’s argument regarding the financial interest has merit. The figures set out at paragraph 3 of Mr Powell’s second statement show that 20% of the claimant’s solicitors personal injury practice arises as a result of its relationship with ALP. A percentage may be misleading since 100% of 1 is still only 1 and the number of cases over 3½ years of 15 does not of itself suggest a significant amount. Nevertheless, it is over 5% of the cases opened by the claimant’s solicitors during that period. I conclude from Mr Powell’s evidence under cross-examination that personal injury work overall is similar in profitability to housing disrepair work since otherwise Mr Powell would have known of the disparity. It is, in my judgment, likely that roughly 5% of the firm’s income comes from the ALP referred files and that seems to me to be a relevant sum in any solicitors’ practice. It is certainly of a different league to the figures put forward by Wiseman Lee in the Myers case.[40]Before I am able to accept that these figures are sufficient for the claimant’s solicitors to be concerned about the termination of their relationship with ALP, I have to consider the nature of that relationship.[41]Mr Stacey’s submission was that a solicitor who operates a delegated authority scheme from an insurer under which the solicitor was obliged to recommend a particular policy would inevitably create an interest on the part of the solicitor to avoid termination of the panel membership. In support of this point, Mr Stacey referred to the wording of the standard attendance note ‘if we take on your case, it is a condition of Accident Line Protect that we issue an insurance policy at the very beginning of the case…’ The condition referred to must, in Mr Stacey’s submission, either be a policy term or a term of the agreement between the claimant’s solicitors and ALP. If it were the latter, then the contractually binding term would, should the claimant’s solicitors breach it, enable ALP to take the claimant’s solicitors off the panel.[42]Mr Powell’s contention was that the arrangement was just a reflection of exclusivity. All delegated authority insurance schemes required the claimant’s solicitors to place eligible cases with a particular insurer. That practice, in Mr Powell’s submission, was endorsed by Brooke LJ in paragraphs 114 and 115 of Hollins where the Court found it ‘impossible to say that the approach [that the claimant’s solicitor] adopted, which we have described in this judgment, was an unreasonable one.’[43]The only obligation, according to Mr Powell, under the ALP scheme is to give independent advice on a claim, its merits and the funding. The claimant’s solicitor was not obliged to take on the claimant as a client. He could take on the client under something other than a CFA arrangement. It was only if the solicitor decided to take on the client under a CFA that the obligation to insure him through the Accident Line scheme occurred.[44]There has been no disclosure of any operating manual or other contractual documentation between the claimant’s solicitors and ALP in this case. Having received Mr Powell’s first witness statement, the defendant took the decision to pursue the point based upon the evidence to hand. As set out above, that evidence is limited to Mr Powell’s witness evidence; the printouts from the ALP and Powell Forster’s websites; and the evidence reported in Myers.[45]I conclude from the evidence before me that the nature of the Accident Line membership is based primarily on the facility to insure clients through a delegated authority scheme in CFA cases. The other benefits, including the referral of new clients, are seen as being additional to the primary purpose of gaining ATE insurance. Members would wish to have access to the ALP insurance policy which would continue even if the other benefits were no longer available. It is striking to me that both Mr Wershof and Mr Powell professed a wish to use the ALP product on eligible cases rather than appearing to have any obligation to do so. As a result, the spectre of termination of the agreement for adverse selection would not arise and the description of a solicitor feeling obliged to ‘recommend’ an ALP policy under some form of duress has not been made out. There is no doubt from the documentation that a claimant such as Mr Elstone would be entirely clear that they would be recommended an ALP policy if they decided to instruct Powell Forster on a CFA basis.[46]In the case of Garrett, it seems likely that the claimant had already been sold an ATE policy before the panel solicitor was ever involved. The question at paragraph 84 of the judgment which according to Mr Stacey, was not relevant for me to answer in this case, is described as ‘What was the effect of the certificate of insurance bearing a date earlier than the CFA’? That suggests the practice of a claims management company tying a claimant to an insurance policy prior to referring the claim to any panel solicitor. The description of the claims management company representative attending Ms Garrett at home to explain the CFA also indicates a practice that is a long way away from the simple referral of a potential claimant by the Accident Line call centre to a local solicitor.[47]Mr Powell denied that there was a discloseable interest on the basis (to use Mr Wershof’s words) that ‘Accident Line is a “membership scheme” and is not a “panel” arrangement.’ I note that Mr Wershof then refers to membership of the panel and it seems to me that too much is made of the terminology.[48]Whether the relationship is described as a panel or a membership scheme, it is clear from the evidence before me that the purpose of the Accident Line scheme is to facilitate the provision of ALP’s insurance product by giving certain solicitors a delegated authority to bind the insurer. It is not a relationship brought about to refer cases to solicitors and to which the provision of insurance is merely peripheral.[49]Therefore, whilst membership of a panel may give rise to an indirect financial interest, if it is in the nature of the Ainsworth panel as set out in Garrett, I find that the arrangements of the ALP panel set out before me do not constitute a discloseable interest in this case.[50]In view of this finding, it is unnecessary for me to address the second and third issues set out at paragraph 21 of this judgment. However, for completeness I shall do so in case an appellate court considers that the answer to the first issue should have been “yes” and not “no” as I have found.

If there was an interest, did Powell Forster disclose it?

[51]Mr Stacey relied on paragraphs 99 and 100 of Garrett to argue that the fact of being on a panel would not denote to the claimant the full relationship between the solicitor and an insurer. It may well denote a badge of quality in the claimant’s mind, but not any financial relationship. As a result, the claimant’s solicitors’ statements on the website or when seeing the client for the first time were insufficient to alert the claimant to the discloseable interest.[52]Mr Powell contrasted paragraph 66 of the Myers judgment regarding the breach of the regulations for failing to make it clear to the claimant that there was an obligation on them to recommend the Accident Line scheme and Lord Justice Brooke’s views in Garrett regarding the impossibility of criticising the claimant’s solicitors for using the scheme which avoided cherry picking as part of a delegated scheme.[53]If I am wrong about whether an interest should be disclosed, then it is clear to me that such interest was not disclosed to the claimant, and I accept Mr Stacey’s submissions on this point. Mr Elstone would have been aware that his solicitors were a member of the Accident Line panel and that would necessitate him using the ALP insurance product but the disclosure to him went no further than that. Had there been a failure to disclose, would such a failure have had a materially adverse effect?[54]I now return to Mr Stacey’s submissions set out in paragraph 39 regarding the financial implications of ALP referred work to the claimant’s solicitors. These submissions evolved during the course of the hearing owing to the additional evidence of Mr Powell being admitted.[55]Mr Stacey submitted that the evidence of Mr Powell under cross-examination was to the effect that personal injury work was more profitable than the legal aid housing work, even taking into account the fact that some personal injury cases would founder under CFA’s and that some housing cases would achieve party and party costs.[56]Mr Stacey suggested that I could draw an inference from the absence of any information in Mr Powell’s second witness statement regarding income and contrasted that with the statement of Mr Wershof in the Myers decision. It was Mr Stacey’s contention that the information regarding the proportion of income to be derived from ALP cases would be as simple to extract from the computer as the number of cases.[57]The purpose of these submissions was to lead to Mr Stacey’s primary submission on this issue that taking all things into account, Powell Forster were much more reliant on the ALP scheme than Wiseman Lee in the Myers case. In Myers less than 0.1% of cases were referred from ALP; in this case the percentage was 5.14%.[58]In relation to personal injury claims opened, in Myers the figure was ‘less than 4%’ (this is described in the judgment as 0.04%); in this case it was 20% (15 of 75 cases).[59]If I accepted Mr Stacey’s submission that the personal injury cases were more profitable than the housing cases, then 5.14% of the cases would reasonably attract at least 5% of the income for the firm during that period. Was such a percentage of turnover sufficient to justify ‘keeping in’ with ALP? In Mr Stacey’s submission, the answer was surely yes, but in Myers it was probably no.[60]The defendant’s submission therefore was that it was ‘not insubstantial’ income. Mr Stacey contrasted this with paragraph 64 of the Myers judgment where claimant’s counsel had belittled the size of the financial interest. There were none of the additional factors in Myers regarding previous use of the solicitors by the claimant to provide a counter point to the relevance of the financial interest and protection afforded to the claimant.[61]Mr Powell submitted that there was no information in the Garrett judgment to show why Judge Steven Stewart QC came to the conclusion that the breach was not a very little thing and therefore had had a materially adverse effect.[62]Mr Powell said the case of Myers was of course not binding, although it might well be persuasive. It was based, in Mr Powell’s view, upon an admission of a discloseable interest by the claimant’s advocate at paragraph 49 of that judgment. Mr Powell said that he did not make the admission made by Mr Carpenter on behalf of his client in the Myers case.[63]In relation to the materially adverse effect, Mr Powell asked me to find that 5.14% was “nothing like” the 95% in Harrison or whatever percentage had actually been relevant in Garrett. He accepted that the claimant could not point to being a repeat client. However, Mr Powell believed that the fact that the claimant’s need required a local solicitor in the location of the accident was analogous in that it was more likely to be the reason for the claimant to instruct a solicitor, regardless of any interest likely to be disclosed.[64]I do not need to make a finding on this issue for my decision but I do so for the sake of completeness. The Court of Appeal made it clear in Garrett that an indirect financial interest was as relevant as a direct financial interest. Consequently the desire to remain on a panel for economic reasons needs to be considered as much as a commission for the sale of the policy to the particular client. The Court also put beyond doubt the need for courts to look at the protection afforded to the client and not whether that protection was ultimately required. For the reasons that I gave at paragraph 39, it seems to me that 20% of the firm’s personal injury case load or approximately 5% of its income must make the non-disclosure sufficiently significant to have affected the protection that should have been afforded to the client in a material way.[65]In conclusion, I find that the claimant’s solicitors were not in breach of Regulation 4(2)(e)(ii) of the Conditional Fee Agreement Regulations 2000 and as such are entitled to their costs which have been agreed between the parties in the sum of £15,000.