The Court of Appeal has provided important guidance on the distinction between a standard solicitor retainer and a Contentious Business Agreement (CBA), confirming that uncertainty within a retainer will likely prevent it from qualifying as a CBA under the Solicitors Act 1974.
In Bradfield Law LLP v Barnes, the Court considered whether a solicitor-client agreement based on hourly charging rates amounted to a CBA. The decision will be of particular interest to solicitors, costs practitioners and those involved in disputes concerning legal fees.
Background
The dispute arose following family law proceedings in which a client instructed a law firm under a written retainer that set out hourly charging rates for various fee earners.
Several statutory bills were subsequently delivered, some of which remained unpaid. More than four years later, the firm commenced proceedings to recover the outstanding fees.
The client argued that the retainer constituted a CBA under section 59 of the Solicitors Act 1974. If correct, the usual statutory assessment regime would not apply in the same way and the firm would first need to seek the court’s determination as to the validity and effect of the agreement before enforcing payment.
The key issue for the Court of Appeal was whether the retainer was sufficiently certain to qualify as a CBA.
The Court’s decision
Dismissing the appeal, the Court of Appeal held that the agreement was not a CBA because it lacked the degree of certainty required by the legislation.
The Court reaffirmed the long-standing principle from Chamberlain v Boodle & King [1982] 1 W.L.R 1443 that a client must know “what they are letting themselves in for” when agreeing to remuneration arrangements that remove or restrict the usual rights of costs assessment.
Although amendments introduced by the Courts and Legal Services Act 1990 expressly allow remuneration by reference to hourly rates, the Court confirmed that those amendments did not remove the requirement for certainty.
Lady Justice Andrews described certainty as being at the very heart of a valid CBA. The Court found that the agreement in question contained numerous uncertainties, including:
- Different hourly rates for multiple fee earners;
- Potential future increases to those rates;
- Uncertainty regarding which fee earners would carry out particular work;
- The possibility that more senior and expensive personnel could undertake tasks without any agreed mechanism controlling those decisions.
The Court concluded that the retainer was not an agreement as to remuneration but merely an indication of how the firm intended to calculate its future bills. As a result, it fell outside the statutory definition of a CBA.
Why the decision matters
The judgment provides welcome clarity in an area that continues to generated uncertainty and costs challenges.
The Court confirmed that simply including hourly rates within a retainer does not automatically create a Contentious Business Agreement. There must be sufficient certainty regarding the basis upon which remuneration will be calculated.
For solicitors and law firms, the decision serves as a reminder that retainers intended to operate as CBAs must be drafted with precision. Agreements that leave key elements of charging arrangements open to future variation may not achieve the protections that a valid CBA can provide.
For clients, the judgment reinforces the importance of transparency and certainty in legal costs arrangements and preserves access to the traditional assessment regime where those requirements have not been met which brings with it the need to act within prescribed time limits if a challenge is to be brought.
8PP comment
Commenting on the decision, Craig Leigh, Barrister and Managing Director of 8PP Barristers & Associates, said:
“This decision reinforces an important principle that has existed for many years: to advance a successful case that a retainer agreement entered into amounts to a Contentious Business Agreement and therefore is outside of the ordinary regime for the recovery of costs between a solicitor and client, the terms of remuneration must be clear and certain.
The Court of Appeal has confirmed that merely setting out hourly charging rates will not necessarily be enough. Where there is uncertainty about who will undertake the work, what rates may apply, or how those rates may change, the agreement is likely to fall outside the CBA regime altogether.
The judgment is likely to be of considerable interest to law firms, costs practitioners and clients alike, particularly at a time when legal costs arrangements are facing increasing scrutiny.”
How 8PP can help
8PP’s Costs & Civil Litigation Funding team advises on solicitor-client costs disputes, costs assessments, retainer challenges, funding arrangements and wider costs-related litigation.
If you would like advice on contentious business agreements, solicitor-client costs disputes or costs recovery issues, please contact us via clerks@8pp.co.uk or 0151 245 9292.
