united-kingdom lawyer
Legality of lawyer retaining monies won in settlement?
<p>In 2015 I employed a "no win no fee" law firm to fight a claim for compensation for damages from the employer of someone who was convicted and jailed.  I signed a Conditional Fee Agreement, and I have a copy of the law firms terms of business.</p>

<p>The conditional fee agreement makes it plainly clear that, whether the case is won, lost or settled, I would pay the law firm no more than a given percentage of my award, if any.</p>

<p>I have monthly emails from the law firm detailing the expenses accrued, and these monthly emails also state that my liability is only in the case of a successful outcome, and is limited to a given percentage of any successful award to cover "unrecovered expenses, disbursements and success fee".</p>

<p>Toward the end of 2016, the other party settled my claim for a significant five figure sum.</p>

<p>At that point, I was told by the law firm that I would be paid "in installments", and what this entailed would be discussed with me by their Costs Manager, to whom the case was now being passed to as the case has been successfully concluded by the solicitor in charge of it.</p>

<p>As it turns out, the Costs Manager disclosed to me that I would be paid immediately about 10% of my settlement, with the rest being retained by the law firm until they have recovered their costs from the other side.  The Costs Manager also noted that this could take several months.</p>

<p>This retention is not detailed anywhere in any signed agreements or terms of business, and has literally only been mentioned after I agreed to the settlement figure.</p>

<p>Do I have legal standing to require the law firm to release all 100% of my settlement to me immediately (minus the success fee percentage)?</p>

<p>I am in the UK, and this is a civil claim.  No courts have yet been involved, the settlement is entirely a private matter and the settlement has indeed been paid to my law firm by the other side at this time. </p>

<p><strong>Update</strong> in case anyone was following this:</p>

<p>I challenged this with the law firm themselves and the Law Society - end result is I now have my money, the firm referred itself to the Law Society for breaching multiple rules, and I have an apology letter from the firm.  </p>

<p>They attempted to selectively quote the agreement, ignoring bits which contradicted their interpretation, and they transferred the money from the client account to their office account without presenting me with a bill of costs, and as such that placed them in violation of Law Society rules.</p>

<p>Basically they attempted to claim 98% of the compensation, and the agreement didn't support them in doing that - they attempted to claim it was my obligation to cover their fees until those fees were recovered from the other side, and they supported that by quoting the agreement right up to the paragraph before it says "we will limit your liability for our costs to x%".</p>

<p>Once this was pointed out to them, with plenty of supporting evidence from the agreement, conversations, correspondence and other sources all saying the same thing, they backed down immediately and referred themselves.</p>

<p>I think several people misunderstood the question here - I wanted to ascertain if there were any legal rules which allowed the firm to do as they did outside the agreement.  There is not.  The firm was in the wrong.</p>

<p>The fact that the other side have settled the case is not the same thing as 'a successful award', so those paragraphs of your agreement with the lawyers do not apply.  The lawyers are entitled to be paid for their time, and until they are they can exercise a lien on any funds they are holding. Since you agreed to the settlement terms, which presumably include a delay (for negotiation or assessment) before the other side pay your legal costs, you probably don't have any cause to sue (or complain to the Law Society).</p>

<p>On the other hand, it seems unlikely from what you say that paying you the sum agreed would affect the solicitors' chance of being paid, and there is no harm in writing to ask exactly why they are retaining the funds (though I do mean asking, not angrily complaining). You might at the same time ask what interest rate they will be paying you; client funds, which these became the moment the solicitors received them, should be invested rather than held on current account.  </p>

<p><strong><em>Do not sign/accept their payment plan. Once accepted, you need their permission to change.</em></strong></p>

<p>Things that come to mind:</p>

<ul>
<li>Your lawyer may not have received funds from the losing side.</li>
<li>A possible appeal window means your lawyer is being cautious.</li>
<li>Your lawyer might have financial difficulties.</li>
<li>The lawyer is playing silly buggers with you.</li>
</ul>

<p>Write (don't phone) your lawyer. Ask them to confirm (in writing) if they have received part or full payment from the losing side. If they have received full payment then I suspect the law will be on your side on ensuring speedy payment.</p>

<p>I suggest you go to www.companieshouse.gov.uk and look up the company your lawyer trades under (I assume lawyers trade as Limited Company). Their tax filings will give you an idea if they have been profitable or loss making in past years. Most (not all) companies will face an audit by the tax man during first three years of trading - if they are going three plus years, and still in business, its likely they are legit. If running less than three years, they might be on weak legs and supporting their business thru client winnings (this is illegal - I believe such funds are legally required to be kept in separate bank accounts).</p>

<p>I suggest talking to Citizens Advice bureau. Unless you (unknowingly) agreed elsewhere in previously signed terms and conditions, I suspect they need to pay you within 28days.</p>

<p>Note that a lawyer will not want you going to the law society with a complaint. Don't warn them of this as it will only make an uncomfortable situation between you two worse - but if you have exhausted other avenues, and you are sure they received but not forwarded you the funds, then I suggest you write and complain to the law society who in turn should encourage co-operation from your lawyer. I would also consider asking debt collectors to get involved. But this should be a last resort.</p>
