Judge: Pepperall J
Citation:  EWHC 3322 (QB)
CFAs made with a firm that later ceased to trade were capable of assignment and the CFAs were validly transferred with the client’s informed consent.
A Claimant appealed against the finding that CFAs entered into with his original solicitors had been validly assigned to other solicitors. The original solicitors, PSB Law, ceased to practice in September 2013 and the Claimant argued that the CFAs were not capable of valid assignment. It was further argued that the Costs Judge had been wrong to treat himself as bound by Budana v Leeds Teaching Hospital NHS Trust  EWCA Civ 1890 It was submitted that the Costs Judge should have held that the CFAs could not be validly assigned at all and could not be assigned without the Claimant’s informed consent, which was never properly obtained. On appeal, the Court found there was no merit in the argument that the CFAs were not capable of assignment or novation, because the original firm of solicitors was ceasing to trade. The Court also stated that there was no sensible distinction to be made between the appeal before it and the situation in Plevin v Paragon Finance Limited (No. 2)  UKSC 23. There was no valid distinction between PSB ceasing to trade altogether and the closure of the partnership in Plevin. In both cases the firm with which the client had entered into a CFA ceased to practice.
With regard to the argument that the Costs Judge should have distinguished the case from Budana, the Court found there was nothing in the points raised in respect of this argument, save on the question of informed consent. Having reviewed the evidence before the Costs Judge, the Court found the original solicitor had properly explained the consequences of either terminating the CFA with PSB Law or simply taking his work to the new solicitors. Had the Claimant simply taken his work to new solicitors, he would have faced a liability under the CFAs. The Costs Judge had been entitled to find that the CFAs had been transferred to the new solicitors with the Claimant’s informed consent. There were obvious advantages in this. Novation ensured that the Claimant continued to be represented by the original solicitor (who was changing firms) in whom he had confidence and who knew his cases. It also ensured that he still had the benefit of the CFAs.