A CAP OF 25% ON COSTS TO BE DEDUCTED FROM DAMAGES GIVES RISE TO PRESUMPTION OF INFORMED CONSENT FROM CLIENT

The Law Society Gazette carries a report of the decision of Regional Costs Judge Rouine in Swann -v- Slater & Gordon. The judge decided that the existence of a cap on costs liability of 25% indicated that a claimant/client had informed consent in relation to a deduction from damages.

THE JUDGMENT ON THIS ISSUE

The claimants were former clients of the defendant solicitors. In each case costs had been deducted from damages.  The claimants challenged that deduction claiming, among other things, that they had not given informed consent as to the deduction. The judge considered that argument and rejected it.  Knowledge and agreement that there was a 25% cap indicated informed consent.

47. Having examined the retainer documentation in relation to these 15 assessments, I am satisfied that they all, allowing for the fact that the actual wording they use may vary from retainer to retainer, make clear that the client has a potential liability to pay fees over and above whatever may have been recovered on an inter partes basis. I pause at this stage to say that the comparison made by leading counsel for the Defendant between the wording of the retainer in these cases and the wording of the retainers, as I understand it as was approved in the case of Herbert, has some real force to it, in my judgment.

48. I am further satisfied that reference to these retainers all demonstrate that each of them contains a provision to the effect that the potential liability to which I have just referred is limited to a maximum of 25 per cent of the client’s award of damages, irrespective of how the sums being deducted might be categorised. There have clearly historically been retainers which have not made provision for a cap and it seems to me there has been previous litigation involving such retainers. However, that is not, I find, the situation in this case. The fact of the existence of a cap has a magnetic attraction to me, in the context of the concept of informed consent, for the purposes of these assessments.

49. Being told that there is a cap, and what that cap might be, is more than sufficient information, in my judgment, for the purposes of obtaining informed consent from a client for deductions to be made from their award of damages. I readily accept that there are, at the start of pursuit of any personal injury damages claim, multiple possible outcomes as to the level of damages received by the client and the reasons why that level of damages was either awarded or achieved through a negotiated settlement. It would be an impossible task, in my judgment, for a solicitor to provide a client with specific advice as to every scenario and every level of damages which might be awarded and the impact that such an award would have on the sums which the solicitors say could be deducted from the award of damages.

50. In my judgment, the realistic and pragmatic approach to the way in which this issue could be managed is for the client to be made aware of their potential maximum exposure to a deduction from damages. At the outset of a personal injury damages claim, which is the point in time in the process which we are considering in the context of informed consent for these purposes, it is, of course, impossible for the solicitor to know with any degree of certainty what level of damages might be awarded to, or agreed on behalf of, that particular client in respect of that particular claim. It clearly would not, therefore, be possible to put a precise figure on the exact monetary amount which might be deducted from the damages by the solicitor.

51. The obvious, in my judgment, alternative in this situation is for the client to be provided with a maximum figure in percentage terms for the sums which the solicitor will deduct from their damages. The client can therefore know at the start of the process that, whatever figure they might receive by way of damages, the maximum percentage of that figure which might be deducted from them. I am readily persuaded that the information as to the existence of a cap on the sums to be deducted from damages and the maximum percentage applicable in those circumstances are, together, more than sufficient to enable a client to give informed consent to the concept of a deduction being taken from their damages by their solicitor. For the avoidance of doubt, I confirm that by reference to all of the retainers in all these 15 cases, such evidence as to the existence of the cap and its maximum percentage value was given, I find, in each case.

52. I am therefore drawn to the conclusion that in each of these cases, the claimant entered into the retainer, having given informed consent to the concept of a potential deduction from their damages of up to a maximum of 25 per cent of the damages awarded or agreed. I pause at this point to observe that I found noteworthy the wholesale absence of any evidence from any of the claimants in any of these cases, explaining what they had not been told or what they had not understood about the fact of a deduction from their damages or the potential level of the same. I also at this point confirm that the wording of the retainer documentation is sufficient, in my judgment, and I can reach the conclusions that I have without specific evidence in relation to each of the retainers being adduced as to the nature of the discussions and the advice given, and I confirm that that is the basis on which I have proceeded.