A Solicitor’s Lien Triumphed In Bott & Co Solicitors Limited v Ryanair DAC [2022]

A lien is a right for one person to retain property in their possession pending satisfaction of a claim against another party. A solicitor’s lien can arise in a number of ways and are not mutually exclusive.

A solicitor has a common law lien to retain monies (held in a client account), documents or other property in their possession pending payment of outstanding fees. This may also be a contractual right set out in the terms of the retainer.

A solicitor can also make an application under section 73 of the Solicitors Act 1974 for a statutory lien over property recovered or preserved in litigation for their assessed costs. Finally a solicitor also has the right to an equitable lien. It does not require the solicitor to be in possession of monies or property but does require that the solicitor was instructed in relation litigation.

The purpose of a solicitor’s equitable lien was encapsulated in the case of Gavin Edmondson Solicitors Limited v Haven Insurance Company Limited (2018) when Lord Brigg confirmed that it was “a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice. Specifically it enable solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack financial resources to pay up front for its pursuit.”

Issues surrounding the test for establishing a solicitor’s equitable lien came to the Supreme Court for determination in the case of Bott & Co Solicitors Limited v Ryanair DAC (2022).

The Facts

Under Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004, where a flight is cancelled or delayed then a passenger is entitled to compensation. This Regulation remained applicable to the UK despite Brexit. Compensation is fixed at €250, €400 or €600 depending on the distance of the flight.

Bott and Co were a firm specialising in consumer claims funded by Conditional No Win No Fee Agreements. The terms of funding were deductions from any compensation of 25% + VAT and an admin fee of £25 per passenger.

They dealt with a number of claims for clients against Ryanair and in admitted claims, the compensation would be paid directly into Bott’s client account for deductions to be made before onward transmission of the remaining compensation to the clients.

In March 2014 Ryanair introduced an online system to allow passengers to make claims directly and speedily promising to make payment of valid claims within 28 days of submission.

In 2016 Ryanair changed their model and started to deal with and pay compensation directly to the clients. Their terms and condition were changed accordingly to deter passengers from engaging third parties to make claims on their behalf.

Bott noted that subsequently only about 70% of their clients would pay over the agreed deductions having received the compensation directly and given the small sums involved it was not commercially viable to then pursue the clients directly for their fees if not paid.

Bott issued proceedings against Ryanair and argued that an equitable lien arose over the compensation due to the clients.

The Issues

The previous case of Khans Solicitors v Chifuntwe (2013) confirmed that it was sufficient that an opposing part was put on notice that a solicitor had a claim for their fees from the sums payable.

That requirement was satisfied in this instance as Ryanair would have received a letter of claim from Bott on behalf of a client setting the terms that Bott were retained.

Funds over which a lien could attach must also be in sight. Again, this was not an issue in the case.
The main issue was whether a lien would only arise when proceedings of some sort had been commenced. The early case of Meguerditchian v Lightbound (1917) stated that you this was required.

However the case of Gavin Edmonson Solicitors Limited (2018) the Supreme Court allowed a solicitor’s lien where personal injury cases were settled in the Road Traffic Accident Protocol scheme.

The High Court Decision

The judge ruled against Bott on the basis that unlike in Gavin, there was not a formalised system sanctioned by the judiciary for early resolution of claims.

The Court of Appeal Decision

By this time, the Supreme Court had given the judgment in Gavin, so it was accepted that it was no longer necessary for formal proceedings to have been issued before an equitable lien could arise, but a solicitor still had to provide ‘litigation services’ which promoted access to justice. It could well apply where costs are incurred in Alternative Dispute Resolution as there is a ‘dispute’ to resolve.

The judge concluded that unless and until Ryanair refused a claim, there was no dispute. The services provided by Bott (i.e. the mere sending of a letter of claim or assisting a client to complete an on-line form) were not “’litigation services’ of the kind that equity will protect”.

The Supreme Court Decision

By a 3:2 majority, this court found for Bott. Promoting access to justice was seen as the key to ‘fixing the boundary’ of a solicitor’s equitable lien to determine the kind of work covered and the kind of (transactional) work not covered. The appropriate test for a solicitor’s equitable lien is whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client.

There was no need to even establish that there was an existing or reasonably anticipated dispute.

Implications

This is great news for solicitors and their clients given the rise of such claims and the ability of solicitor firms to use technology to streamline processing of such claims. The court emphasised that the threshold for establishing ‘significant contribution’ was low.

“We should make it clear that whether an equitable lien arises does not depend on a judgment about the difficulty or lack of difficulty of the work done by the solicitor. Nor is it relevant whether the work done by the solicitor’s firm is done manually or by a computer.”

Obviously such protection is at present still only afforded to solicitors and not claims management companies.

It is also right that where a client has made a voluntary and conscious choice to engage a solicitor to seek compensation, having been warned in advance of the likely charges of doing so and knowing that they could avoid such charges by making the claim directly themselves, they should not be able to then avoid the rightful payment of such charges for services actually rendered.

It is imperative that solicitors are transparent about their fees and the fact that there is an alternative for the client to make such claims directly within incurring such fees. Notice will also need to be given to the paying party of the funding arrangement in place which give rise to an equitable lien should they seek to circumvent payment.

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