Contingency fees

Tel-ka Talk v Commissioners of HM Revenue and Customs (SCCO ref PTH 0904822 – Master Hurst 17 June 2010)

An argument that whatever the position may have been before, since 1990 an employment tribunal has been a court as defined by s119 of the Courts and Legal Services Act of that year was disposed of in these proceedings in which the Law Society intervened. Senior Costs Master Hurst held that a contingency fee agreement (whereby a lawyer is paid a percentage of what his client recovers) entered into between a solicitor and his client for the former to represent the latter before the VAT and Duties Tribunal was lawful because it was it was specifically made lawful by s57 of the Solicitors Act 1974 in a noncontentious business agreement. The tribunal was not a ‘court’ within the purview of s87 of that Act. The business of the tribunal was non-contentious and there was no evidence that parliament intended to enlarge the meaning of ‘court’ to include tribunals or that proceedings before a tribunal were contentious business. The Senior Master observed ‘Failure to comply with the Damages Based Agreement Regulations 2010 may render an agreement unenforceable. It seems likely that in future legal representatives in the employment tribunal will rely on conditional fee agreements which are no longer regulated and which can be drafted in such a way as to produce the same result as a contingency fee agreement’.