Russell-Cooke has acted for the Solicitors Regulation Authority in a Court of Appeal Judgement in which it intervened in an appeal as an interested party.
The case of Westlaw Services Limited and Khan v Boddy and The Solicitors Regulation Authority related to an appeal against an order made in relation to claims brought by the appellants for the payment for services against the Estate of a solicitor, Mr. Peter Boddy.
The lower court held that the alleged agreements (entered into in 2002) between the appellants and Mr. Boddy were unlawful agreements to share fees, in breach of Rule 7 of the Solicitors Practice Rules ("the SPR") 1990 and so were void and unenforceable.
There were numerous grounds of appeal, but the appellants alleged, inter alia, that Rule 7 (1) was ultra vires and void and therefore unenforceable.
In its judgement dated 30 June 2010, The Court of Appeal (comprising of Lord Justices Rix, Etherton and Gross) firmly rejected this allegation, for the following reasons:
- The SPR have the effect of subordinate legislation made pursuant to the Solicitors act 1974. Accordingly, the making of any agreement in breach of the SPR is therefore unlawful.
- In making subordinate legislation the Law Society is acting in the public interest and not merely in the interests of the solicitors' profession.
- The agreements in question were not merely incidental breaches of the SPR, but were the matters expressly prohibited by Rule 7 (1).
- The case of Mohammed v Alaga & Co  EWCA Civ 3037 is binding authority that a fee sharing arrangement in breach of Rule 7 is not only unlawful, but void and unenforceable.
- There are sound policy reasons underlying the prohibition in Rule 7 (1). The fundamental objective underlying the rule against fee sharing is the maintenance of a solicitors independence and integrity. Rule 7(1) was formulated to ensure that solicitors remain free from external pressure from non-solicitors, who are not subject to the equivalent regulatory obligations and might therefore be inclined to prioritise their own interests above those of their client.
- It is relevant to take into account what was lawful, and, if public policy is relevant, what was public policy at the time of a particular arrangement, even if the policy subsequently changes.
Although the SPR has been subsequently amended by Rule 8 of the Solicitors' code of Conduct, 2007, this judgement is of considerable importance to the solicitors' profession as the Court of Appeal's Rulings are transferable to the current solicitors code. The judgement also records the SRA's elaboration in its skeleton argument of its policy objectives on the issue of fee-sharing.
If you would like further information regarding this case, please contact Paolo Sidoli, who is a partner in Russell-Cooke's Commercial Litigation Team. Timothy Dutton QC and James McClleland (both of Fountain Court Chambers) were instructed as counsel.