VI. Speculative Fees and Pro Bono Publico
A. Speculative Fees
Speculative fees are defined as fees that are only payable if a case is won.131 It is different from a contingency fee in that there is no increase for risk.
In many cases, the risk may be small. Lawyers may know that either, clients will be in funds when they win or, more likely, that costs including the solicitor’s fees, will be ordered against, and paid by, the losing party. In England, accepting a case on a speculative basis was regarded as unlawful maintenance, although it was permitted in Scotland.132In addition to the distaste for maintenance, a lawyer agreeing to speculate on a case succeeding was probably suspected of ‘ambulance chasing’. To modern eyes, the
131 J Levin, ‘Solicitors Acting Speculatively and Pro Bono’ (1996) 15 Civil Justice Quarterly 44, at 47 and Bevan Ashford v Yeandle [1999] Ch 239.
132 HL Debs 12 June 1995 Vol 564 col 1573.
contempt was undeserved. Lawyers may agree a speculative fee in a genuine effort to make a meritorious claim viable. Indeed, there were strong arguments for allowing speculative fees in some cases, for example, for clients who cannot get legal aid on financial grounds.[1922]
It appeared that a breakthrough for speculative fees came with acceptance of conditional fees. Shortly after the introduction of CFAs, in Thai Trading Co v Taylor[1923] the Court of Appeal held that there was no problem with a solicitor not charging a fee if a case was lost, provided that no extra fee was charged if the case was won. Lord Justice Millett said that a speculative fee should not ‘be regarded as contrary to public policy today, if indeed it ever was’.[1924]
The new clarity on speculative fees was short-lived. Subsequently, in Awwad v Geraghty & Co (a firm), a solicitor (G) failed in a claim for speculative fees on the ground that it was a champertous arrangement.
She had agreed with the client, A, to charge him a ‘conditional normal fee’, meaning her standard hourly fee, if successful, but only £90 per hour if he lost. A lost and refused to pay G.[1925] The Court of Appeal said that conditional fee arrangements had become acceptable within certain statutory parameters, but, under common law, had always been illegal and unenforceable. Such an agreement was contrary to public policy and exposed lawyers to temptation. In effect, a speculative fee agreement was a CFA, but without any formal requirements. In any event, the current position is that the common law has not actually changed to allow speculative fees. In Sibthorpe v Southwark LBC,[1926]^1 the Court of Appeal confirmed Awwad v Geraghty and doubted Thai Trading. It may, nonetheless, be time for a change of public policy on the issue.[1927]B. Pro Bono Publico
Acting pro bono publico generally means offering legal services without any charge. Although it was once regarded as a form of maintenance, it is now positively encouraged by the Law Society and the Bar.[1928] When lawyers were ‘acting pro bono’ the operation of the indemnity principle meant that, if their clients were successful, they would not get costs awarded against the other side. This was because the lawyer had agreed that there would be no costs.
i. Pro Bono Costs Orders
It would once have been anomalous to consider acting pro bono publico as part of a discussion of fees. It is, however, no longer so. From October 2008 courts in England and Wales were empowered to order a losing party to make a payment to a designated organisation, under section 194 of the Legal Services Act 2007. Pro bono costs orders were available where a case has been won with pro bono help, and the losing party would otherwise have escaped liability for costs simply because it had lost to a party that had been helped pro bono.
Pro bono costs orders were introduced at the same time as the establishment of an Access to Justice Foundation (AJF).
AJF is a national charity established by the Advice Services Alliance, Bar Council, ILEX and Law Society. It provides grant funding to support pro bono and advice agencies and receives sums produced by pro bono costs orders. Initially, there was lack of awareness of the availability of costs orders among practitioners. Apparently, only £100,000 was raised by pro bono costs orders in 2012.[1929] Anticipated difficulties in having costs taxed by the court may deter pro bono lawyers from seeking orders. This raises the question of whether such orders should be compulsory.[1930]ii. Costs Awarded against Party Aided Pro Bono Publico
There is probably a high chance that a party winning a case against a claimant aided pro bono public will not recover costs. This raises the question of whether legal costs awarded against a pro bono client should be recoverable from that party’s lawyer. Some old cases mandated personal liability where the lawyers had not satisfied themselves that the client had a reasonable case. The law was clarified in Tolstoy-Miloslavsky v Aldington,[1931] where it was held that the court had no jurisdiction to make a costs order against a solicitor solely on the ground that he acted without a fee.
In Tolstoy, the Court held that lawyers acting without expectation of a fee are not under an obligation to protect the other side from a hopeless case. They do not have to ‘impose a pre-trial screen through which litigants must pass’, before receiving free representation.[1932] Therefore, a lawyer acting pro bono should only be held personally liable for the other side’s costs under the wasted costs jurisdiction.[1933] This risk arises in some cases irrespective of whether the lawyer acts without charge or for a fee.
VII.