Legal Cost Specialists

Posts made in August, 2007

Challenge to Accident Line Protect Scheme

By on Aug 1, 2007 | 0 comments

Judgment has recently been handed down in a challenge to the validity of Conditional Fee Agreements (CFAs) entered into under the Law Society approved Accident Line Protect Scheme. The case was heard by a Master of the Supreme Court Costs Office (SCCO). A full copy of the judgment, Myers v Bonnington (Cavendish Hotel) Ltd [2007] EWHC 90077 (Costs), can be found here. The case centred around the issue of whether there had been a breach of Regulation 4(2)(e)(ii) of the now revoked CFA Regulations 2000, which required the legal representative to inform the client before a CFA is entered into: “(e) whether the legal representative considers that any particular method or methods of financing any or all of those 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.” In Garrett v Halton Borough Council [2006] EWCA Civ 1017 the Court of Appeal had held to be invalid a CFA where the solicitors had failed to inform the client that they had an interest in recommending an insurance policy. This was on the basis that, although the solicitors had told their client that they were on a claims management company’s panel, they had failed to inform the client that they thereby had an indirect financial interest in recommending the policy, because if they did not do so they would have their panel membership withdrawn. The Court concluded that the profit generated by cases referred was likely to be of greater significance to the solicitors than any commissions that might be paid on insurance premiums. It was this failure to disclose to a client that they had financial interest in remaining on the panel, which would be lost if the client did not accept their recommendation that they enter into this specific After-the-Event (ATE) policy, that amounted to a material breach of the regulations, as the client did not know that the solicitors were recommending the policy because this was dictated by their financial interest. Similar challenges to the Accident Line Protect Scheme have long been on the horizon, but Myers appears to be the first reported decision. The Claimant’s...

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