Judge: Patten LJ, Coulson LJ and Sir Colin Rimer
Citation:  EWCA Civ 1629
The invalidity of a CFA entered into with a former client did not prevent a firm from attempting to seek damages for loss of chance to recover their costs, where that client’s new solicitor had compromised the claim without informing them.
A solicitor who left his original firm to set up his own practice, took with him a personal injury Claimant who had instructed the firm under a CFA. The solicitor gave a number of undertakings in respect of the files which he took with him. The Claimant’s claim was subsequently compromised on the basis that the Defendant would pay damages and costs. Two-thirds of the costs belonged to the solicitor’s original firm. The solicitor rejected two offers by the Defendant to settle the costs and the matter went to detailed assessment. The former firm were not informed about what was happening. At detailed assessment, the District Judge held that the CFA was unenforceable because it did not comply with the CFA Regulations 2000. The former firm brought proceedings against the solicitor for damages for breach of his undertaking to keep it informed about costs negotiations and loss of a chance to be reimbursed in respect of its costs. The Judge, relying on Binder v Alachouzos held that the compromise of a claim which had been made under a contract which was said to be illegal was still an enforceable compromise. Thus, the CFA’s invalidity was irrelevant to the firm’s ability to recover damages for the loss of a chance. The Court of Appeal held that solicitors enter into CFAs in good faith, as a way of providing legal services to a Claimant who needs them and would not otherwise be able to pay for them. Sometimes things went wrong and the CFA which had been entered into could be found to be unenforceable. It would go much too far to say that such a result should always strike down an earlier bona fide compromise of costs based on that CFA. The firm’s solicitor had an arguable case and the solicitor’s appeal was dismissed.
 (1972) 2 QB 151.