CANDEY in court of appeal in another important lawyers' rights case

CANDEY v David Charles Lawson Millermay lead to a ground-breaking decision on whether solicitors should be permitted to take assignments of actions from their clients, subject to sharing the proceeds with them.

CANDEY was originally instructed by Peter Farrar (now deceased) in his claim against his former business partner, Charles Miller, for breach of trust and breach of fiduciary duty.

Mr Farrar’s claim was struck out at first instance but was reinstated upon appeal to the High Court. CANDEY then successfully resisted Mr Miller’s appeals to the Court of Appeal and Supreme Court.

Due to a lack of capital Mr Farrar was unable to continue. He therefore assigned his claim to CANDEY so that the firm could pursue it to trial on his behalf but in its own name and at the firm's risk. The terms of the assignment ensured that Mr Farrar would be no worse off than he had been under his previous fee arrangement and CANDEY required that its client first took independent legal advice.

Mr Miller again sought to shut out Mr Farrar from justice and opposed CANDEY’s application on the ground that the assignment was void for champerty.

Mr Justice Marcus Smith dismissed CANDEY’s application to be substituted as the Claimant on the basis that, as a matter of public policy, solicitors are not permitted to take assignments of actions from their clients. However, the Judge recognised the wider public policy issue and granted CANDEY permission to appeal to the Court of Appeal. The hearing took place on 3 March 2022.

CANDEY’s position is that the old doctrine of champerty, which prevented lawyers from sharing risk, has evolved with the advent of contingent fee, and damages-based, agreements in which solicitors are permitted to take a financial interest in their clients’ litigation. If anyone else can take an assignment such as a funder, why not the lawyers who have funded the case, provided their client is independently advised on the assignment.

Were lawyers to be restricted from taking an assignment of a case, it would be akin to lending money but being prevented from having the benefit of a mortgage. Lawyers need to be incentivised to take risk as otherwise justice will become the preserve of the rich, with funders only financing the large claims.

This case is significant not only for clients who may find themselves unable to access justice if they are unable to assign claims to anyone other than their lawyers, but also for lawyers who may need to take steps to secure the recovery of their fees if their client runs out of money. Without the ability to take an assignment lawyers will be dissuaded from taking on clients who are on the brink of insolvency unless they pay upfront. Wealthier clients will therefore always succeed without a Judge determining the merits because of their economic advantage.

CANDEY is currently awaiting judgment from the Court of Appeal.