Understanding the Limitation of Section 74(3) and Part 46.9(2) in RTA Portal Claims: Analysis of Belsner v CAM Legal Services Ltd ([2022] EWCA Civ 1387)

Introduction

The case of Belsner v CAM Legal Services Ltd ([2022] EWCA Civ 1387) addresses pivotal issues surrounding the charging practices of solicitors involved in small road traffic accident (RTA) claims. With the evolution of RTA claims being predominantly initiated through online pre-action portals, the legal framework governing solicitor fees has undergone significant transformation. This judgment scrutinizes the applicability of specific provisions of the Solicitors Act 1974 and the Civil Procedure Rules (CPR) to non-contentious business conducted via these portals, setting a precedent for future interpretations and practices in the legal domain.

Summary of the Judgment

The Court of Appeal rendered a decision that declared both Section 74(3) of the Solicitors Act 1974 and CPR Part 46.9(2) inapplicable to claims processed through the RTA portal without subsequent county court proceedings. Consequently, the Solicitors in this case were permitted to charge their fixed costs plus a capped success fee, which was deemed fair and reasonable. The court also highlighted deficiencies in the current legislative framework, emphasizing the need for reform to address the nuances introduced by pre-action online portals.

Analysis

Precedents Cited

The judgment meticulously references several precedents to underpin its reasoning:

• Sinclair v CAM Legal Services Ltd: Emphasized fiduciary duties in solicitor-client relationships.
• Plevin v. Paragon Personal Finance Ltd (No.2) [2017] UKSC 23: Clarified that "proceedings" are not a term of art, supporting the view that RTA portal claims are distinct from traditional court proceedings.
• Bott & Co Solicitors Ltd v. Ryanair DAC [2022] UKSC 8: Highlighted the diminishing relevance of the contentious/non-contentious business distinction.
• In re Simpkin Marshall Ltd [1959] Ch 229: Established that business is considered contentious only when court proceedings are initiated.
• Motto v. Trafigura [2012] 1 WLR 657: Clarified that solicitors act for themselves during fee negotiations, not bound by fiduciary duties until a formal agreement is reached.
• Kelly v. Cooper [1993] AC 205: Demonstrated that fiduciary duties do not extend to negotiations where the solicitor acts in their own interest.

Legal Reasoning

The court's reasoning centered on the interpretation of statutory provisions and their applicability to non-contentious business:

• Section 74(3) and Part 46.9(2) Applicability: The court determined that these provisions are confined to contentious business, defined as activities "in or for the purposes of proceedings begun before a court or before an arbitrator." Since RTA portal claims do not involve formal court proceedings, these sections were deemed inapplicable.
• Fiduciary Duties: The court rejected the notion that solicitors owed fiduciary duties during the negotiation of the Conditional Fee Agreement (CFA). It clarified that fiduciary obligations arise from the actual performance of professional duties, not from preliminary negotiations.
• Professional Duties vs. Fiduciary Duties: While solicitors have professional obligations to inform clients about costs, these do not equate to fiduciary duties of loyalty or informed consent regarding fee structures.
• Fairness and Reasonableness: In assessing costs, the court applied the principles of fairness and reasonableness as outlined in the Solicitors' (Non-Contentious Business) Remuneration Order 2009, ensuring that the fees charged were justifiable under the case circumstances.

Impact

The judgment carries significant implications for future RTA portal claims and the broader legal practice:

• Solicitor Fee Structures: Solicitors can confidently charge fixed costs plus capped success fees for non-contentious RTA claims without the constraints of Section 74(3) and Part 46.9(2).
• Legislative Reform: The court acknowledged the outdated nature of the contentious/non-contentious distinction, advocating for legislative updates to accommodate the modern litigation landscape dominated by online portals.
• Professional Conduct: Solicitors are reminded of their duty under the SRA Code of Conduct to provide clear and comprehensive information about fees, enhancing transparency and client understanding.
• Cost Assessment Practices: The case sets a precedent for assessing costs based on fairness and reasonableness rather than rigid statutory interpretations, allowing for more flexible and context-sensitive evaluations.

Complex Concepts Simplified

Contentious vs. Non-Contentious Business

In legal terms, contentious business refers to legal work directly associated with court or arbitration proceedings, where there is a dispute between parties. Non-contentious business, on the other hand, involves legal activities that do not involve disputes, such as drafting wills or handling property transactions. This distinction is crucial because different rules govern how solicitors can charge for these types of services.

Section 74(3) of the Solicitors Act 1974

This section limits the amount solicitors can charge for their services in contentious cases to what could reasonably be allowed between the parties in those proceedings. It ensures that clients are not overcharged for legal representation in disputes.

CPR Part 46.9(2)

An exception within the Civil Procedure Rules that allows solicitors and clients to agree in writing to a higher fee than what Section 74(3) would typically permit, provided it is expressly allowed by the contract.

Conditional Fee Agreement (CFA)

A contractual agreement between a solicitor and a client where the solicitor's fees are contingent upon winning the case. In this context, a success fee is an additional payment the solicitor receives if the case is successful, often calculated as a percentage of the damages awarded.

Conclusion