press release
Court case clears up CFA confusion
22 January 2009
A recent High Court case has further clarified
the law concerning conditional fee arrangements (CFAs), and a law
firm’s duty to investigate with clients whether funding should be
on the basis of BTE or ATE (before the event/after the event)
insurance in cases of litigation.
The case, concerning Italian businessman Carlo
Silvera, centred on his liability to pay the fees of law firms Bray
Walker and Bevans, who acted for him on a ‘no win, no fee’ basis,
but backed by an ATE insurance policy in a litigation matter.
Following the judgment, the businessman claimed that he was not
liable to pay the firms’ fees as they had failed to explore the
existence of a BTE legal expenses insurance policy as an
alternative to conditional fees in breach of the regulations.
Nichola Evans, a specialist in legal expenses
insurance and partner at law firm Browne Jacobson, said: “There
are two issues at stake in this case. First is as to whether it is
appropriate to run a case under a BTE or an ATE policy. The second,
and this is likely to become more important in the credit crunch
with the likely rise in professional negligence claims, is the
extent of a law firm’s duty to investigate different methods of
funding litigation, particularly when one bears in mind that this
case involved fees in excess of £350,000.
“Presiding over the case, Mr Justice Blake
said the law firms had not breached the conditional fee regulations
by failing to advise on the BTE legal expenses cover. The case was
not the sort where one would assume that there may be insurance
cover.
“The Claimant had not raised anything
which might put the firms on notice that there may be an
alternative way of funding the case. If, for instance, the Claimant
had made a suggestion to that effect, or if other matters came to
light such as membership of a trade association that might put a
solicitor on notice that there may be alternatives, then clearly a
solicitor would be under a duty to make further
enquiries.”
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