Assignment of CFAs: compensator challenge dismissed by Supreme Court

Plevin (respondent) v Paragon Personal Finance Limited (appellant) [29.03.17]

Supreme Court decides by a majority of four to one that the respondent’s pre 1 April 2013 Conditional Fee Agreement (CFA) was validly assigned and the success fee is therefore recoverable.

This important ruling is now the highest authority that when CFAs are validly assigned they will be upheld by the courts, enabling successful claimants to recover their success fee if the original CFA was entered into before 1 April 2013.

Background

In this case, the respondent entered into a CFA with her original solicitors in 2008. Subsequently, there were two technical changes of solicitor. The solicitors reconstituted themselves as an LLP and then into a limited company. The appellant sought to argue that the CFA was not validly assigned and therefore no effective retainer was in place at the time when costs were incurred by the Supreme Court. Their argument was that the term “work in progress” in the transfer agreements only included work already done at the transfer date.

Dismissal

The Supreme Court rejected this argument.

It further asserted that even if such arguments were with merit, the respondent solicitor’s:

  • Subsequent contact with the respondent, where they stated that they would “continue to represent [you] on the same terms and conditions as previously”.
  • The respondent’s assent to the same, by provision of instructions, meant that the argument would “lead to nowhere”.

Impact

This ruling upholds Jenkins v Young Brothers Transport Ltd [2006] where the High Court found that CFAs could be lawfully assigned in some circumstances, where the assignee takes both the benefit and the burden of that contract. Griffith and Griffith v Paragon Personal Finance Limited [2016] and the Court of Appeal case of Jones v Spire Healthcare Ltd [2016] recently followed Jenkins.

The ruling needs to be considered by defendant parties where transitional CFAs (those straddling the Legal Aid Sentencing and Punishment of Offenders Act 2012 changes to recoverability of success fees) have been assigned. Most compensators would have already made allowance for a pre-1 April 2013 success fee and/or After the Event Insurance in cases where the claimant changes legal representation to account for the likelihood that it will be payable.

Each case must be assessed on its own merit as some firms may fall foul of the law on assignment and there may still be cases where one could challenge the validity of the assignment.

Comment

The issue of assignment of CFAs, which can arise in a number of circumstances, continues to cause disputes within costs proceedings.

Whilst this case involved relatively straightforward assignment, reasonable enquiries should continue to be made in respect of any proposed assignment of CFAs.