Court Rejects DBA Argument and Clarifies CFA Information Requirements

PERRETT V WOLFERSTANS LLP [2025] EWHC 68 (SCCO)

Costs Judge Rowley finds law firm’s Conditional Fee Agreement met legal standards, rejecting client’s arguments about improper funding and costs disclosure, while emphasising solicitors’ discretion in offering fee arrangements.

Accordingly, where, as here, there are no other specific factors said to dwarf the time spent, I consider that I should assess the costs by reference to that time spent and then to consider the sum allowed to see whether other matters cause me to adjust that figure in order to determine a sum that is fair and reasonable.

Citations

Bolt Burdon Solicitors v Tariq and Ors [2016] EWHC 811 (QB) A non-contentious business agreement must possess sufficient certainty to preclude challenges under s70 of the Solicitors Act 1974, ensuring clients clearly understand their contractual obligations. Wilson v Spector Partnership [2007] EWHC 133 (Ch) The classification of a business agreement depends on its form rather than its description, and agreements lacking sufficient certainty may not restrict a client’s rights under the Solicitors Act 1974. R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 Litigation funding agreements can fall under regulatory frameworks even if the parties assume they are common law contracts, requiring compliance with statutory requirements. McDaniel & Co v Clarke [2014] EWHC 3826 (QB) Solicitors must provide comprehensive advice regarding alternative funding arrangements to meet their regulatory obligations and ensure clients can make informed decisions. St James v Wilkin Chapman [2024] EWHC (KB) Statements made in client care letters may amend or override terms in conditional fee agreements if taken into account by the client under the Consumer Rights Act 2015. Belsner v Cam Legal Services [2022] EWCA Civ 1387 Solicitors must provide the best possible information regarding legal costs, including likely cost recoverability, to enable clients to make informed decisions and meet regulatory standards. Herbert v HH Law Limited [2019] EWCA Civ 527 Clear and comprehensive retainer documentation can satisfy requirements for providing clients with sufficient information about costs and liabilities under regulatory obligations. Treasury Solicitor v Regester [1978] 1 WLR 446 In assessing non-contentious costs, reliance on the time spent should be resisted where other factors—like urgency or complexity—are significantly material to the valuation. Property and Reversionary Investment Corporation Ltd v Secretary of State for the Environment [1975] 1 WLR 1504 The value of the subject matter of non-contentious business can outweigh other factors, such as time spent, when assessing what constitutes fair and reasonable costs. Jemma Trust v Liptrot [2003] EWCA Civ 1476 In non-contentious costs assessments, a fair and reasonable sum requires consideration of the case’s complexity, value, and labour involved, and should not rely solely on time records. Holcroft v Thorneycroft Solicitors Ltd [2024] EWHC 1473 (KB) Settlement mandates provided at the conclusion of a retainer may constitute enforceable non-contentious business agreements if sufficiently clear and not unfair or unreasonable.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

An agreement must meet the statutory requirements of its category (e.g., CFA or DBA) for enforceability under sections 58 or 58AA of the Courts and Legal Services Act 1990, but agreements relating to non-contentious business are exempt from such statutory regulation under section 58AA(9). [34, 35, 42]
Non-contentious business agreements that lack sufficient certainty (e.g., where hourly rates can be adjusted without specification) will not be valid under section 57 of the Solicitors Act 1974, but they are still subject to assessment under the Solicitors (Non-Contentious Business) Remuneration Order 2009. [39-41]
To comply with the Consumer Rights Act 2015, any terms or representations that influence the consumer’s decision to enter into a contract may form part of the agreement unless expressly qualified or superseded by subsequent express terms. [59, 63, 65]

Solicitors have a professional obligation under the SRA Code of Conduct to provide clients with the best possible information about costs, including the likely overall cost, the extent of costs recoverable from opponents, and potential shortfalls. Failure to do so may constitute non-compliance with regulatory standards but does not automatically render an agreement unenforceable. [70-75, 81]
When assessing non-contentious costs under the Solicitors (Non-Contentious Business) Remuneration Order 2009, the court must determine a fair and reasonable amount considering a range of specified factors, including complexity, skill, time spent, and the importance of the matter to the client, while ensuring an overall balance that is fair to both solicitor and client. [86, 92, 95]

While the defendant provided documentation outlining costs and deductions, I find that the complete absence of any indication of likely recoverable costs falls below the 'best information possible' standard required by the SRA Code of Conduct. However, the agreement's 25% cap on charges provides sufficient clarity to mitigate any lack of specificity as to recoverable costs.

Key Findings In The Case

The court determined that the retainer agreement between the claimant and the defendant was a Conditional Fee Agreement (CFA) and not a Damages-Based Agreement (DBA), based on the contractual terms and the applicable provisions of the Courts and Legal Services Act 1990, section 58, rather than section 58AA. However, it was not a valid Non-Contentious Business Agreement (NCBA) under section 57 of the Solicitors Act 1974 due to insufficient certainty in its terms. [34, 41]
The claimant failed to establish that a receptionist’s pre-contractual statements altered the terms of the CFA under the Consumer Rights Act 2015, as the court found no clear evidence that any such statement influenced the claimant’s understanding of the agreement, nor did it qualify or override the contractual terms later agreed to explicitly. [23, 27, 68]
The defendant’s provision of information under the SRA Code of Conduct was found lacking, as the claimant was not given sufficient information about the likely disparity between the defendant’s estimated costs and the recoverable fixed costs in a portal case. Despite this regulatory breach, the liability cap of 25% in the CFA provided sufficient clarity to avoid rendering the agreement unenforceable. [74, 81]

The court rejected the claimant’s argument that the defendant was required to offer alternative funding arrangements, such as a Damages-Based Agreement (DBA), holding that solicitors are not obligated under the SRA Code of Conduct to offer funding methods they do not provide, nor to advise clients about such alternatives. [48, 55, 57]
In assessing non-contentious costs under the Solicitors (Non-Contentious Business) Remuneration Order 2009, the court emphasised that the primary basis for assessment should be the time spent on the matter, while also considering relevant factors under the Order. Non-specified factors, such as compliance with regulatory standards, may form part of the broader circumstances but would not necessarily outweigh the specified factors. [86, 94]

Furthermore, Ms Barton agreed that no specific information regarding the likely shortfall in recoverable costs was provided to the client. While the CFA documentation outlined the possibility of deductions, the absence of clear estimates left the client unaware of the inevitable financial implications. Though compliant in form, such practices fail to meet the 'best information possible' standard under the SRA Code of Conduct.

Background

The case of Perrett v Wolferstans LLP involved a dispute over the nature of the retainer agreement between Mr. Ryan Perrett, the claimant, and Wolferstans LLP, the defendant. Mr. Perrett had instructed Wolferstans LLP following an accident at work in December 2018. The claimant sought legal representation under a “no-win, no-fee” agreement, which he believed would cover all his legal costs if his claim was successful. The dispute centered on whether the agreement was a Conditional Fee Agreement (CFA) or a Damages-Based Agreement (DBA), and the implications for costs recovery.

Costs Issues Before the Court

The key costs issues before the court included the nature of the retainer agreement (CFA vs. DBA), the method of assessing non-contentious costs, and whether the defendant had adequately informed the claimant about potential costs and funding options. The claimant argued that the agreement should be considered a DBA, which would have been more beneficial to him, while the defendant maintained it was a CFA. Additionally, there were concerns about whether the defendant had complied with the Solicitors Regulation Authority (SRA) Code of Conduct regarding client information and costs transparency.

The Parties’ Positions

Mr. Perrett’s legal team argued that the agreement should be viewed as a DBA, which would limit the solicitors’ share of damages to 25% inclusive of VAT, without additional base fees. They also contended that the defendant failed to provide adequate information about costs and funding options, breaching the SRA Code of Conduct. Wolferstans LLP countered that the agreement was clearly a CFA, which did not require them to offer alternative funding options like a DBA. They maintained that they had provided sufficient information to the claimant regarding the terms of the CFA.

The Court’s Decision

The court determined that the agreement was a CFA rather than a DBA, as it did not comply with the legislative requirements for a DBA. Costs Judge Rowley found that the defendant’s failure to provide detailed information about potential costs did not significantly impact the claimant’s decision-making, as the overall cap on costs was clearly communicated. The court concluded that while the defendant’s provision of information fell short of the “best possible” standard, it did not invalidate the agreement or justify a reduction in costs. The assessment of costs would proceed under the Solicitors (Non-Contentious Business) Remuneration Order 2009, focusing on whether the costs were fair and reasonable.

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