The Court of Appeal has heard arguments in a significant legal costs dispute that could have wider implications for transparency in personal injury litigation and the disclosure of commissions linked to after-the-event (ATE) insurance policies.
The appeal arises from a case involving personal injury firm Coupland Cavendish, trading as Gowing Law Solicitors, which is challenging an earlier ruling requiring it to respond to requests for further information made by a former client under Part 18 of the Civil Procedure Rules.
Representing the former client, Stephen Turner, counsel argued that solicitors acting for personal injury claimants should be prepared to disclose whether they receive commissions when arranging ATE insurance policies. Such policies are commonly obtained to protect claimants from adverse legal costs and are often funded through deductions from compensation awarded at the conclusion of a claim.
It was submitted that clients should have the right to ask straightforward questions about any financial arrangements connected with these insurance policies, particularly where solicitors act as agents in selecting or purchasing the cover. The argument emphasised that transparency is essential to maintaining public confidence in legal services and ensuring clients fully understand how costs associated with their case are calculated.
During the hearing, Lady Justice Andrews observed that refusing to answer reasonable questions about potential commissions could be viewed as undesirable, although she suggested that complaints of this nature might be more appropriately addressed through the Legal Ombudsman rather than through court proceedings.
The dispute stems from a personal injury claim valued at approximately £3,000, where the claimant was charged £750 in legal costs and success fees, together with an additional £245 for an ATE insurance premium. Several months after receiving the bill, the former client submitted a series of Part 18 requests seeking further information about the costs and any related financial arrangements.
The solicitors declined to answer, maintaining that the requests amounted to a speculative inquiry without a proper legal basis.
The case follows an earlier High Court decision in Turner v Coupland Cavendish, where Mr Justice Sweeting held that Part 18 requests could be appropriate where the information sought relates directly to matters in dispute. The judgment also indicated that a party requesting information is not required to establish a detailed factual case before seeking clarification.
Counsel for Coupland Cavendish argued before the Court of Appeal that the Solicitors Act 1974 is intended to deal with disputes concerning the reasonableness of legal costs and was never designed to investigate whether a solicitor may have received commissions from third parties. It was also stressed that there is no allegation that the firm actually received any commission in this case.
The firm’s legal team further submitted that allowing such requests could significantly expand the scope of costs assessment proceedings, encouraging speculative enquiries rather than resolving genuine disputes over legal fees.
Lawyers representing the former client rejected that suggestion, arguing that providing clear answers at an early stage could reduce future litigation by resolving concerns before they develop into more complex disputes.
The Court of Appeal has reserved its judgment, with a decision expected after the courts return following the summer recess in October.
The outcome is expected to provide important guidance on the extent to which law firms may be required to disclose financial arrangements connected with ATE insurance and could influence how future legal costs disputes are managed.
