Intended arbitration proceedings – Client making “no win, no fee” agreement with solicitor – Solicitor making similar agreement with barrister, but allowing for additional fee if successful – Whether agreements validated by Courts and Legal Services Act 1990 or otherwise
The defendant (GY), acting through its liquidator, wished to make a claim in excess of £400,000 against another company, such claim arising under a contract in the ICE standard form which required submission to arbitration. In July 1987 GY made an agreement (the first agreement) with the plaintiff solicitors whereby: (i) in the event of success it would pay to the firm its disbursements and normal profit costs; and (ii) in the event of failure to recover, its liability to the firm would be limited to disbursements. A second agreement was subsequently made between the firm and counsel instructed to appear at the arbitration, whereby counsel would receive no fee if GY failed, but an uplift of 50% above the normal fee in the event of success. The question for determination was whether the agreements, being in the nature of conditional fee agreements, were valid under the Courts and Legal Services Act 1990 or otherwise, or void as being contrary to public policy.
Held The agreements were valid.
1. Being related to arbitration proceedings, the agreements fell outside the 1990 Act. They were not conditional fee agreements to which the validating provisions of section 58 applied, because such agreements had to relate to “specified proceedings”, which as defined in section 119(1) meant proceedings “in any court”.
2. However, although the 1990 Act was not directly applicable, its provisions and those of the regulations made thereunder had to be taken into account in order to decide whether, as a matter of common law, a conditional fee agreement should be categorised as champertous and accordingly unenforceable for reasons of public policy. Since notions of public policy changed with the passage of time (see Hill v Archbold [1968] 1 QB 686), it seemed impossible to argue that an agreement, which would have been valid for the purpose of court proceedings, offended against public policy where the litigation was to be conducted by arbitration. That reasoning was now endorsed by a very recent decision of the Court of Appeal [brought to the court’s attention after judgment had been reserved]: see Thai Trading Co v Taylor The Times March 6 1998. Though not concerned with an intended arbitration, the simple “no win, no fee” agreement upheld in that case was similar in all material respects to the first agreement in the present case. Since the uplift allowed to counsel under the second agreement fell within the limit prescribed by para 3 of the Conditional Fee Agreements Ord 1995 (SI No 1674), that agreement should also be upheld on the authority of the Thai Trading case.
Declan O’Mahoney (instructed by Bevan Ashford, of Tiverton) appeared for the parties; Alice Robinson (instructed by the Treasury Solicitor) appeared as amicus curiae.