Candey Limited are a well-known London commercial law firm determined to take maximum advantage of the rules allowing conditional fee agreements/damages-based agreements to give better access to justice to claimants involved in commercial cases in the High Court. Over the last 12 months, their attempts to achieve access to justice for their clients has come badly unstuck. This blog is not a criticism of Candey but a statement of the inevitability that clever ways of circumventing the rule book are bound to fail because the legal structure upon which conditional fee agreements and damages based agreements is at best not even a half-way house to achieving access to justice for those making commercial claims.
It is true that we have come a long way since the rules of champerty and maintenance prevented any direct support of claims. Parliament has intervened to allow solicitors to represent clients under a CFA or DBA although subsequently has watered down the law by forbidding recovery of ATE premiums or CFA mark ups from a losing party. The relaxation of the common law has allowed litigation funders access to a potentially lucrative market. However, funders will only fund cases with a sufficiently high level of damages to make recovery worthwhile and they depend on counsel advising a strong chance of success. Both the funding market and the CFA/DBA regime only avail claimants and are of no benefit to defendants who may struggle to finance their defence.
How did Candey come unstuck?
In Tonstate Group and Others v Candey, Candey failed in their attempt to persuade the court that a counterclaiming defendant could use the DBA system to preserve an asset rather than recover one.
In Farrar v Miller, the claimant assigned his cause of action to Candey, principally because he faced bankruptcy. There is nothing wrong in assigning a cause of action to a third party with no interest in the dispute but there is if the assignment is to lawyers for the purpose of preserving their fees. The assignment fell foul of the rules against champerty and maintenance.
In Candey v Bosheh, the Court of Appeal rejected the argument by Candey that its client owed it an implied duty of good faith which it had breached by reaching a direct settlement with the other party to the litigation without seeking payment of its costs.
Finally, the Supreme Court has decided in Candey v Crumpler that Candey had waived its equitable line on funds recovered in litigation in which it had represented a party now in liquidation. There were technical arguments but The Supreme Court rejected the public policy argument that the equitable lien should be preserved in the access to justice.
In subsequent blogs, I will be looking at:
-Other impediments that the courts and parliament have put in the way of the less well-funded litigant
-How Unity Legal Solutions can help small business gin the litigation process.
-What Unity would like to see the Government do to make access to justice easier.