In a significant ruling, the Court of Appeal has dismissed the claims of two public access barristers seeking nearly £125,000 in fees, deeming the retainer terms unfair.
The legal proceedings involved Katharine Atay, who had engaged barristers Michael Glaser KC and Victoria Miller in financial remedy actions against her affluent former spouse. The fees agreed upon were £108,000, payable in instalments, which covered the pre-trial review and a subsequent 10-day final hearing scheduled for 2020. However, the arrangement stipulated full payment even if the hearing was postponed, a condition that has now come under scrutiny.
Lord Justice Nugee, delivering the unanimous judgment of the appeal court, highlighted the imbalance created by the retainer. He pointed out that under the contract, the client was required to pay in full even without receiving any substantive services, allowing the barristers to potentially benefit from charging other clients as well. This led to the conclusion that the payment term created a ‘significant imbalance in the parties’ rights and obligations,’ unfavourable to the consumer.
Initially, Judge Berkley had declared the payment term contrary to the Consumer Rights Act 2015, noting its unfairness due to the substantial imbalance it imposed. He nonetheless ordered Ms Atay to remit 70% of the contractual fees as quantum meruit. On appeal, Mr Justice Turner supported the evaluation of unfairness, further criticising the quantum meruit order for potentially discouraging fair contract practices among traders.
The appeal court concurred entirely with the lower courts’ findings on the lack of fairness. Lord Justice Nugee underscored that the payment conditions unjustly shifted the risk of adjournment entirely onto the client while offering no reciprocal mechanism to adjust fees if alternative work was undertaken by the barristers. He specifically noted that while clients might expect to pay for preparation if a hearing is adjourned or settled after significant preparatory work, paying for unrendered services was unreasonable, particularly when not responsible for the adjournment.
The judgment stressed the importance of good faith in client agreements, pointing out that the imbalance of information and the client’s vulnerable position at the time of agreement were critical factors. It concluded by recognising the need for contracts that protect both the financial interests of counsel and the rights of clients not to incur costs for services not delivered.
The Court of Appeal’s decision underscores the necessity for fairness and balance in legal retainers, ensuring clients are not disproportionately burdened by costs when services are not rendered as expected.
