A recent case in the Court of Appeal has clarified part of the Law Society’s Model Conditional Fee Agreement. This is the section that deals with a client’s failure to accept advice from the solicitor in relation to settlement.

Paragraph 7 (iii) (b) of the agreement includes the following –

(iii) We can end this agreement if you reject our opinion about making a settlement with your opponent. You must then:
pay the basic charges and our disbursements, including barristers’ fees;
pay the success fee if you go on to win your claim for damages.

There is no confusion if a client refuses to accept an offer where the solicitor has advised acceptance. This would come squarely within the right to end the CFA. But the case of Butler v Bankside Commercial Ltd [2020] EWCA Civ 203 raised a different but very familiar problem. What is the position where the solcitor advises the client to put forward a settlement offer, and this advice is rejected by the client?

In Butler the solicitors did just that. The client rejected their advice. The solicitor terminated the CFA and billed the client. The client contested the bill and argued that 7 (iii) (b) was limited to refusal to accept an offer. This argument was rejected by the Court of Appeal. There was nothing in the clause which supported this limited interpretation – “if (b) (iii) were limited to the acceptance of an offer already made, the clause would have said so.” (Lewison LJ 16). The appeal judge went on the affirm the words of the trial judge – “one would not expect the level of protection which they are afforded against the whims of the unreasonably optimistic client to turn upon the random happenstance of whether or not the other side has made an approach which can be categorised as a contractual offer capable of acceptance.”

The trial judge summarised the position simply and clearly in words approved by the Court of Appeal –
(i) the letters sent by the claimant clearly and unambiguously set out its opinion;
(ii) that opinion was about making a settlement with her opponent; and
(iii) the defendant rejected that opinion.

The client in this case was liable for just over £238,000.00.