Unlawful, void and unenforceable profit agreement

West Law Services Ltd and another v Boddy (Solicitors Regulation Authority intervening) [2010] EWCA Civ 929; SJ 10 August p30

Peter Boddy was a solicitor sole practitioner, who died on 19 February 2004. He mainly conducted publicly-funded criminal litigation in the magistrates’ courts. With a view to expanding his work in the Crown Court he entered into agreements with Tahir Khan, who was not legally qualified, and with a law graduate Kush Verma who later qualified as a solicitor. They were highly successful in obtaining Crown Court work for the firm. In proceedings against Mr Boddy’s widow as executrix of his estate the first claimant, which sued as assignee of Mr Verma, and Mr Khan alleged that Mr Boddy had agreed to pay Mr Verma 75% of the net fee received from the Legal Services Commission in any case he introduced and Mr Khan 50 per cent, and that he would reimburse disbursements incurred by them in the course of their work for him. They claimed that Mr Boddy had been paid by the LSC, but in breach of contract he had not paid them. The judge struck out their claims on the basis that the alleged agreements were unlawful agreements to share fees, in breach of the Solicitors’ Practice Rules 1990 r.7(1), and so were void and unenforceable. The claimants appealed contending that: (1) an arrangement in breach of r.7 was not automatically void and unenforceable, and a contravention of the Rules would only result in the invalidity and unenforceability of a contract if enforcement of the contract would be contrary to public policy, which it was not in the instant case where the claimants had carried out work for an agreed fee in ignorance of r.7; and (2) Mr Khan was an employee within the exception in r.7(1)(c). The Solicitors Regulation Authority intervened.