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County court rules The Accident Group's CFAs breach regulations; 700 firms face non-payment of fees
Some 700 firms of solicitors may have breached Cond-itional Fee Agreement (CFA) rules and face not being paid for hundreds of hours of work after a landmark county court judgment. In English Clipson it was found that claims management company The Accident Group (Tag) used its agent, Accident Investigation Line (AIL), to explain and agree funding arrangements with clients. This breaches key sections of the CFA regulations. Under the regulations, a legal adviser as opposed to an agent is required to inform the client about matters such as the circumstances in which they are liable to pay the lawyers' costs and when they can seek assessment of the lawyers' fees and expenses. There are around 700 firms of solicitors on Tag's panel that are affected by this ruling. Costs experts say that there are thousands of uncompleted cases that lawyers face not being paid for. This is because they are retained under Tag's CFAs, which have been found, subject to an appeal, to have breached regulations. Costs expert Jim Diamond said: "If this case is appealed and not overturned then it will have grave consequences for the majority of Tag firms." In his judgment handed down on 5 August, Judge Wharton concluded: "The panel solicitor has no direct contact with the client before he signs up to the CFA." He also found there was a similar lack of contact in relation to the client's after the event insurance policy and the loan agreement. Manchester firm Tranters Freeclaim Solicitors has claims against 18 law firms, because, allegedly, they charged clients for the costs of premiums and awarded costs when they should not have done so because their CFAs were invalid. There has also been a breach of the Courts and Legal Services Act 1990, which requires a lawyer "to have provided prescribed information before the agreement is made". The judge also disagreed that Tag's operating manual enables it to appoint AIL "to undertake the advice duties as legal representative". The judge added that the solicitors' professional indemnity insurers can avoid liability for claims arising out of advice given by AIL. In a statement Tag said that it was "disappointed by the decision of the court in this instance not to allow recovery of solicitors' costs and insurance premium. This only benefits the large insurance companies at the expense of consumers. The Accident Group is supporting an appeal, having received specialist advice that the judgment is flawed."