In this article, Connor Wright explores the recent Senior Court Costs Office decision in David Richardson & Ors v Slater & Gordon UK Limited [2025] EWHC 1220 (SCCO), which addressed the enforceability of Conditional Fee Agreements (CFAs) and solicitors’ obligations to ensure clients are adequately informed.
Costs – Conditional Fee Agreements – Enforceability – Success Fees
Factual Background
224 claimants initiated proceedings against Slater & Gordon UK Limited, seeking assessment of costs deducted from their personal injury settlements under CFAs. Ten claimants were selected as test cases, with only four providing oral evidence during the preliminary issues hearing. The claimants contended that the firm failed to provide sufficient explanation of the CFA terms, particularly regarding the potential deductions from damages and the implications of the success fee and After-the-Event (ATE) insurance premiums.
Key Legal Issues
As noted above, the central issue was whether Slater & Gordon had fulfilled their duty to adequately inform clients about the CFA terms. The claimants generally argued that the firm’s explanations were insufficient, leading to misunderstandings about the financial implications of the agreements.
The Court considered nine preliminary issues, including:
- Whether the retainers were unenforceable Damages Based Agreements.
- The application and effect of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.
- Compliance with Regulation 14 of the above regulations.
- Adequacy of information provided regarding potential liability for costs exceeding recoverable amounts.
- Informed consent to contractual terms permitting payment of costs greater than recoverable amounts.
- Fairness and reasonableness of costs in unissued claims.
- Fairness of terms under the Consumer Rights Act 2015.
- Success fees.
- Hourly rates.
Judgment
Senior Costs Judge Rowley held that the CFAs were enforceable and not DBAs. He found that Slater & Gordon had provided adequate information to clients regarding the CFA terms, including potential deductions and success fees. The Court emphasised that a combination of clear oral explanations and comprehensive written documentation was sufficient to inform clients about the CFA terms. In particular, he noted that the critical information pertained to the potential financial outcomes for the client, notably the 25% cap on damages as prescribed by the CFA Regulations 2013.
The Court noted at [69]-[70]:
In my judgment, the combination of an oral explanation of the key terms in a simple fashion together with provision of a comprehensive written agreement was a perfectly appropriate method for informing the client of the component parts and signing them up in a businesslike manner…
…Whilst I am not keen on the prospect of the success fee based on the risks of the case and calculated as against the base costs being downgraded as a key piece of information, I take the view that the key term in respect of a successful claim is the one which explains the worst potential outcome to the client. This is the percentage cap on damages prescribed by the CFA Regulations 2013 and not the original percentage uplift on the base costs.”
Senior Costs Judge Rowley further observed that the claimants had received documentation outlining the CFA terms but chose not to read them, which did not invalidate the agreements. The Court found no evidence of misrepresentation or undue pressure by the Defendant.
Implications for Practitioners
While the formal requirement for oral explanation of CFA terms, to prevent unenforceability, was revoked in 2005, Richardson underscores the benefits of a robust policy to ensure clients understand the key terms of a CFA. Practitioners will likely benefit from explaining key or unusual terms, especially those that affect clients’ financial interests. Maintaining records of these explanations can be crucial in defending against future challenges.
The decision also highlights that clients’ failure to read further documents does not automatically render a CFA unenforceable, provided that adequate information was made available and no misconduct occurred. Solicitors must, however, be vigilant in ensuring that their communication methods are effective and that clients are genuinely informed.
It could be said that Richardson is, perhaps rightly, supportive of a growing focus on the substance of CFAs, over formality. While there were technical differences between them, the following cases are demonstrative of the court’s approach to solicitor-client costs disputes and informed consent under CFAs. The extent to which clients must be informed of, particularly, unusual terms was considered in Herbert v HH Law Ltd [2019] EWCA Civ 527. In that case, it was decided that a blanket success fee (unrelated to litigation risk) was unusual in amount, and that failing to clearly and fairly explain the purpose of a blanket success fee was insufficient to ensure clients’ informed consent for the purpose of CPR 46.9(3).[1] In Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387, at [75] it was further decided (among many other important things) that solicitors do not owe a fiduciary duty to their client during the negotiation of CFA terms. It was, however, suggested at [82]-[86] that clients should be informed about key CFA terms such that they can determine what services they need, particularly relating to the overall cost of the claim. That is the case at least as a matter of good practice under the SRA Code of Conduct, if not in law. Richardson at [126]-[134] confirms that it is possible to enter into a CFA without a detailed explanation of the recoverability of fees under any fixed costs regime, as long as it is clear in writing that costs may exceed those recoverable in litigation from the other party. While informed consent is not a strict prerequisite to the enforceability of CFAs, its absence may be relevant to the reasonableness of costs under CPR 46.9(3). A CFA calculated on an hourly-rate basis is not, however, in itself, “unusual” so as to engage the presumption that they were unreasonably incurred, under that rule.
This decision will, no doubt, be welcomed by claimant personal injury firms.
Conclusion
This decision affirms that a balanced approach, combining oral and written communication, is appropriate for informing clients about CFA terms. It follows a line of judicial and legislative decisions, post-2005, which demonstrate an increasing focus on practical enforceability and reasonableness, over technical formality. The decision nonetheless serves as a reminder for legal practitioners to ensure transparency in client communications.
For the full judgment, see: David Richardson & Ors v Slater & Gordon UK Limited [2025] EWHC 1220 (SCCO)
[1] CPR 46.9(3) deals with whether the client has been informed of and agreed to “unusual” charges. This does not concern enforceability per se, but failure to explain such terms may well undermine the reasonableness, and thus recovery, of the costs claimed.
Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational and/or informational purposes. It is not intended to be a substitute for specific legal advice and should not be relied upon for this purpose.
This article represents the opinion of the author and does not necessarily reflect the view of any other member of St Philips Chambers.
