The Supreme Court has today handed down a landmark decision in which it has developed the law of a solicitor’s equitable lien that has existed for over 200 years. It is as an important case for access to justice, and the verdict will resonate across the legal profession.
In its traditional form, the solicitor’s equitable lien entitled a solicitor to recoup their fees out of the money recovered by their client through litigation. However, if the opposing party paid the money directly to the client, having been made aware of the solicitor’s entitlement to be paid its fees, and the client failed to pay the solicitor, the court may order the opposing party to pay the solicitor those fees. Until recently, that right was only enforceable when the money was recovered by the client after Court proceedings or arbitration. In these proceedings, Bott & Co (advised by disputes specialist Rosenblatt) challenged that outdated rule which was considered no longer in keeping with modern litigation.
Bott & Co is a firm of solicitors which specialises in consumer claims conducted on a “no win no fee” basis. Bott & Co’s business included representing handling large volumes of flight delay compensation claims. If successful in the claim, Bott & Co would be entitled to be paid fees by the client. The dispute, in short, arose when Ryanair decided to deal directly with passengers who made flight delay compensation claims, notwithstanding that the passenger was represented by Bott & Co. As a result, Ryanair paid out any successful claims directly to the passenger leaving Bott & Co without the opportunity to deduct its fees from the compensation before paying the balance to its client.
The lower courts decided that Bott & Co was not entitled to an equitable lien against Ryanair because the services it provided fell outside the boundary of litigation (for most of its clients, court proceedings were not issued by Bott & Co). That was based upon a 1917 judgment of the Court of Appeal in Meguerditchian v Lightbound which determined that a necessary ingredient of the solicitor’s equitable lien was the existence of Court proceedings. The Supreme Court recognised that modern litigation had significantly developed since the Court of Appeal considered the issue in 1917. The Supreme Court recognised that:
- modern litigation (or dispute resolution) encourages parties to seek to resolve their disputes without the recourse to court proceedings and
- the promotion of access to justice for potential claimants with insufficient means to pay solicitors upfront meant that solicitors require certainty at the outset of their instructions that an equitable lien will be enforceable even if court proceedings are never required.
The majority of the Supreme Court (Lord Briggs, Lady Arden, and Lord Burrows) decided that a solicitor’s equitable lien will arise in the following circumstances:
- The solicitor must provide services (within the scope of the retainer with its client) in relation to the making of a claim (with or without legal proceedings).
- The solicitor’s services must significantly contribute to the successful recovery of money by the client.
- The opponent must be on notice of the solicitor’s contractual entitlement to be paid from the proceeds of the claim.
When these conditions are fulfilled, if a defendant acts unconscionably by paying the client directly (for example to cut the solicitor out of the loop), the defendant will incur the liability to make an additional payment of the solicitors’ fees if the solicitor’s own client fails to pay.
Practitioners should consider including wording in a letter of claim to put a potential defendant on notice as early as possible should they wish to rely on the equitable lien.
Finally, there was debate during the hearing as to whether the equitable lien should be extended beyond solicitors to other practitioner who nowadays are permitted to provide litigation services. That issue was not decided by the Supreme Court, but Lord Briggs noted that the issue “would in all probability best be left to legislation.”
The Rosenblatt team was led by Anthony Field, supported by Justin Nimmo and Charlotte Woodward. Rosenblatt instructed Nicholas Bacon QC and Ben Smiley of 4 New Square who appeared before the Supreme Court.
“It is important for people without the ability to pay lawyers to get representation. Today’s decision goes a long way to protecting the public and giving them access to good quality properly funded legal advice. It prevents Goliath going straight to David and ignoring the slingshot.” Anthony Field, Rosenblatt
The Supreme Court judgment can be found at Bott & Co Solicitors Ltd (Appellant) v Ryanair DAC (Respondent) (supremecourt.uk) and a summary at Bott & Co Solicitors Ltd (Appellant) v Ryanair DAC (Respondent) – Press Summary (supremecourt.uk).
Enquiries:
RBG Holdings plc
Barbara Ashley
+44 20 7242 5905
barbara.ashley@memerycrystal.com
About Rosenblatt (www.rosenblatt-law.co.uk)
Rosenblatt is best known for being aggressive, outcome-driven litigators; in high-profile, high-value and complex cases. Often with an international element.
Established in the City of London in 1989, Rosenblatt is now entirely focused on Dispute Resolution. Rosenblatt is the trading name of the contentious disputes team within RBG Legal Services Limited, part of AIM-listed professional services group RBG Holdings plc. In 2021, Rosenblatt enhanced its already excellent reputation in disputes when the disputes team from sister brand Memery Crystal joined Rosenblatt.
Rosenblatt handles all types of commercial disputes including claims for breach of contract, negligence, commercial fraud, shareholder and company disputes and cross-border insolvency.
About RBG Holdings plc
RBG Holdings plc is a professional services group, which comprises the following divisions: RBG Legal Services Limited including Rosenblatt and Memery Crystal. Litigation funding housing LionFish Litigation Finance and sell-side only M&A advisory practice Convex Capital.
