In an important appeal decision in SGI Legal LLP v Karatysz  EWHC 1608 (QB) Mr Justice Lavender held that solicitors who had acted for a client in a personal injury claim were entitled to receive payment in respect of their costs from the damages recovered by the client. The solicitors’ former client had challenged the costs deducted from damages on the basis that such costs were ‘unusual’ and thus unreasonable, because they exceeded the costs payable by the opponent and because she had not given ‘informed consent’ to this deduction. Overturning the judge below, Lavender J held that the solicitors’ reasonable costs were to be determined on the basis of reasonable hours and rates. The judge stated that what is usual or unusual as between solicitor and client is a very different question from the question of what is recoverable from the opponent. Therefore the judge reinstated the deduction of 25% of the client’s damages that the solicitors had made for their costs.
The judge also held that the ‘amount’ of the solicitor’s bill, for the purposes of determining the extent of any reduction to the bill achieved by the client, was the amount the bill demanded by way of payment, not any higher amount indicated by the bill as reflecting the solicitor’s charges before an overall cap was applied.
This is an important appeal decision that is likely to impact the many claims now being made by clients challenging the deductions made from their damages by their former solicitors.