Costs News

17 March 2022
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Solicitors urged to tell defendants up front of reliance on equitable lien

Claimant solicitors have been advised to put potential defendants on notice as early as possible that they wish to rely on an equitable lien, in the wake of yesterday’s Supreme Court ruling that it was available in ‘uncontested’ claims.

Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8 concerned the airline dealing directly with the Cheshire law firm’s flight delay clients, including paying them compensation. Around 30% of clients did not pay on the fees they owed Bott & Co and the firm sought to enforce an equitable lien over compensation against Ryanair.

Both the High Court and Court of Appeal dismissed the claim, with the latter ruling that the firm was not conducting litigation when the claims were not contested, which was most of the time, and so was not eligible for an equitable lien.

The Supreme Court allowed Bott & Co’s appeal by a 3:2 majority. According to Rosenblatt, Bott & Co’s solicitors in the case, the court recognised that modern litigation “encourages parties to seek to resolve their disputes without the recourse to court proceedings”.

Further, the promotion of access to justice for potential claimants with insufficient means to pay solicitors upfront meant that solicitors required certainty at the outset of their instructions that an equitable lien would be enforceable even if court proceedings were never required.

The court carefully considered its 2018 decision in Gavin Edmondson Solicitors Ltd v Haven Insurance Co, which Lord Burrows said was “best interpreted as supporting a clear, principled and easy-to-apply test” on the equitable lien “that does not turn on whether there was a dispute”.

This case could not be distinguished from Gavin Edmondson, he said. The test for a solicitor’s equitable lien was “whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client”.

He explained: “That seems to me to be the best interpretation of what Gavin Edmondson laid down. It is a clear and simple test to apply. Solicitors (and potential defendants) will know exactly where they stand.”

The majority agreed that Bott & Co’s services crossed the low threshold of having “significantly contributed” to the recovery of compensation. Lady Arden said its work in this case, “while inconvenient to Ryanair, is entrepreneurial and clearly results in solicitors providing a service which people find useful”.

Rosenblatt said practitioners should now “consider including wording in a letter of claim to put a potential defendant on notice as early as possible should they wish to rely on the equitable lien”.

Lord Briggs noted how disproportionate costs were the main barrier to people bringing claims over small or modest sums. “Any methods by which solicitors can assist in reducing that disproportionality, so as to make the pursuit of small and moderate claims a realistic choice for ordinary people, are in principle likely to serve the cause of access to justice.”

Senior partner David Bott said: “We believe today’s ruling enables innovation to persist, with the law catching up with modern legal services.

“It is reassuring that the courts acknowledge that access to justice is well served by our activities and that airlines (or any potential defendant) should not interfere in matters where the claimant has chosen legal representation.”

Rosenblatt partner Anthony Field said: “It is important for people without the ability to pay lawyers to get representation. The decision goes a long way to protecting the public and giving them access to good-quality, properly funded legal advice. It prevents Goliath going straight to David and ignoring the slingshot.”

Nicholas Bacon QC and Ben Smiley of 4 New Square appeared for Bott & Co in the Supreme Court.

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