A recent Court of Appeal decision on direct access highlights important practice points for barristers wanting to protect themselves from loss of income from unexpected diary gaps by requiring payment or part-payment of the brief fee considerably in advance
By Alice Nash, Barrister, Hailsham Chambers
Glaser v Atay [2024] EWCA Civ 1111 was a claim by two barristers seeking to enforce a contractual term entitling them to their full fees for a hearing that was adjourned some weeks before it was due to take place, and before they had commenced their preparation.
Mrs Atay had instructed the claimants as leading and junior counsel in high-value and bitterly contested financial remedy proceedings. She engaged them on a direct access basis, so the contracts were “trader to consumer” contracts and susceptible to challenge under the Consumer Rights Act 2015 (“CRA”).
The contracts had the following significant features:
- They expressly covered “preparation for and representation at” two hearings: a PTR listed for July 2020 and a final hearing listed for 10 days from 21 September 2020;
- They set fees on a global basis, without any breakdown between elements of work or even between the two hearings. The agreed fees were a global £90,000 +VAT for leading counsel and £45,000 +VAT for junior counsel (“the fee term”);
- They provided for payment by instalments, but again the instalments were not expressed as being referable to any particular work. The bulk of the fee was due on 31 August 2020, 21 days before the final hearing;
- The key term provided that, if the hearing did not go ahead for any reason, the full fees would remain payable, and further fees would be incurred for any adjourned hearing (“the payment term”), although the barristers were not committed to any further appearances.
The first two instalments were paid, and the PTR hearing was effective, but on 26 August 2020, the final hearing was adjourned. On 31 August 2020, Mrs Atay informed counsel that she would not be requiring their services further, and refused to make any further payment.
The barristers sued, seeking to recover their full fees due under the final two instalments. Upholding the two courts below, the Court of Appeal held that the payment term was unfair under s.62 of the CRA, and therefore not binding on Mrs Atay.
Under s.64 a term cannot be assessed for fairness to the extent either that it specifies the main subject matter of the contract, or that the assessment is as to the appropriateness of the price, provided that the term is “transparent and prominent” (which was not disputed). In other words, the CRA does not empower the courts to determine what is a fair price for goods or services. The claimants argued that the payment term fell within these “safe harbour” provisions, but that argument was rejected: the fee term fell within the safe harbour, but assessment of the payment term was not about pricing, but the reasonableness of requiring the entire fee to be paid even when events outside Mrs Atay’s control caused it to become impossible for the work to be completed.
Schedule 2 CRA contains a non-exhaustive “grey list” of terms which may be unfair, including, at paragraph 5, “A term which has the object or effect of requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied.” Thus, non-refundable fees may be permissible as long as they are not disproportionately high.
The Court of Appeal had no difficulty accepting that it was disproportionate for counsel to retain what amounted to the entire fee for the adjourned hearing, particularly when the element that would have been refreshers in referred work was rolled up in the fee. The payment term caused a significant imbalance between the parties: Mrs Atay bore all the risk of the hearing not going ahead, irrespective of whether any work had actually been undertaken, whilst Counsel were purportedly free to pocket the entire fee and then accept other work and earn further fees on top. The conclusion that the payment term was unfair was “well open to the judges below”.
With the payment term effectively deleted from the contract, there was no basis for any payment by way of quantum meruit (which had been awarded at first instance but overturned on appeal to the High Court). The contract was an entire agreement, the performance of which was rendered impossible by the adjournment of the hearing. There was no basis for a contractual quantum meruit because this was not a case where no fee had been agreed: rather, the fee was agreed but the work could no longer be done.
There was also no basis for an equitable quantum meruit, firstly because Mrs Atay’s decision to dispense with counsel’s services on 31 August was not a breach of any obligation, and also because in any event she had received no benefit at counsel’s expense. The court rejected the submission that the service rendered to Mrs Atay was the blocking out of counsel’s diaries: she was paying for them actually to prepare for the hearing.
The barristers did not go completely uncompensated, because the client did not seek the return of the instalments already paid. Had she done so, interesting questions would have arisen about whether contractual advance payments for services not actually performed can be recovered by the client.
Importantly, as Nugee LJ specifically stated, the case did not decide that counsel can never claim payment if a hearing is cancelled at a late stage, but such terms must be carefully drafted to ensure a fair balance between protecting counsel from unavoidable loss of income from sudden diary gaps and not charging clients for doing nothing.
The case highlights a number of key points for barristers accepting instructions on direct access:
- Bespoke drafting tailored to the type of work being undertaken is crucial. The contract in this case was based on a Bar Council model, but one which was “inadequate for the sort of case in which it was used”;
- The contract must be in clear, intelligible language and, in the case of a pricing term, prominent (i.e. brought to the attention of the consumer);
- If the work envisaged has a number of elements, it is likely to be better to structure fees by reference each element of the work rather than a lump sum;
- It is unlikely to be fair for non-refundable fees to be incurred well in advance of any work being done;
- This does not mean that barristers cannot ask for the entire trial fee (including refreshers) in advance in order to protect themselves against non-payment. It is possible to agree that the client will be reimbursed or partly reimbursed for trial days that do not go ahead. This does not offend against the prohibition on holding client money provided the provision is suitably worded;
- Terms which protect the barrister against a diary gap that cannot be filled must strike a fair balance. This might look like staged payments which reflect the increasing risk that nothing else will be available to fill the time and replace the fees.
Some indication of what might constitute a fair balance in adjournment cases can perhaps be gleaned from the approach of the courts in costs assessment between opposing parties to litigation, where abated brief fees are commonly awarded at 50% of the full brief fee in cases which settle after delivery of the brief but before substantial work is carried out. However, it is important to bear in mind the transparency requirements that apply to consumer contracts; relying on a convention that may be well understood between solicitors and counsel is unlikely to be sufficient when dealing directly with a lay client. The basis of and rationale for charging what is in effect a booking fee should be clearly set out. Equally, by staging payments and ascribing elements of the fee to particular work, it should be easier to justify charging a higher percentage when a hearing is adjourned at shorter notice.
Whilst the CRA will not come into play where the client instructs counsel through a solicitor, barristers should nonetheless consider whether their professional duties to their clients require greater transparency in agreeing in advance of accepting a brief what charges will be made in the event of a hearing being adjourned. One of the Core Duties in the BSB Handbook is to provide a competent standard of work and service to each client: CD7 (emphasis added). Terms of service, including the basis of charging, must be agreed when instructions are first accepted: r.C22. This feeds into Outcome OC18: “Clients are adequately informed as to the terms on which the work is to be done”. Clients cannot complain to the Legal Ombudsman about the level of fees, but they can complain about inadequate costs information, which if upheld can mean that fees must be partially refunded. Transparency is perhaps the best protection against future complaints.
Alice Nash, Barrister, Hailsham Chambers