A & E INVESTMENTS INC. and (SECOND) ROBERT KIDD AGAINST (FIRST) LEVY & McRAE SOLICITORS LLP and (SECOND) JONATHAN BROWN [2020] ScotCS CSOH_14 (29 January 2020)

A & E INVESTMENTS INC. and (SECOND) ROBERT KIDD AGAINST (FIRST) LEVY & McRAE SOLICITORS LLP and (SECOND) JONATHAN BROWN [2020] ScotCS CSOH_14 (29 January 2020)

The success fee elements of the agreements are pacta de quota litis because they provide for fees to be increased by a percentage calculated by reference to the fruits of the litigation, which is prohibited by Scots law and contrary to public policy. Such arrangements are illegal and unenforceable. The defenders' arguments that the arrangements are speculative or conditional fees are rejected as the fees vary in proportion to the amount recovered, not merely on success. The pursuers' averments of breach of fiduciary duty and knowing receipt are sufficient for inquiry and not irrelevant at this stage. The second pursuer has title and interest to seek declarators. The defenders' pleas of...

Citation
[2020] ScotCS CSOH_14
Parties
Pursuer: A & E Investments Inc.; Pursuer: Robert Kidd; Defender: Levy & McRae Solicitors LLP; Defender: Jonathan Brown
Jurisdiction
Scotland
Judgment Date
29 January 2020
Procedural Posture
Commercial Action (court of Session, Scotland) / Debate on Relevancy (pleadings)
Outcome
Success fee elements of the agreements declared illegal and unenforceable as pacta de quota litis; case to proceed to inquiry on remedies and fiduciary breach.
Legal Topics
Pactum De Quota Litis, Success Fees, Speculative Fee Agreements, Fiduciary Duties of Solicitors, Personal Bar, Knowing Receipt, Declaratory Relief
Contract Law Legal Profession Regulation Civil Procedure Pactum De Quota Litis Success Fees Speculative Fee Agreements Fiduciary Duties of Solicitors Personal Bar +2 more

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Parties

A & E Investments Inc.

Pursuer

Robert Kidd

Pursuer

Levy & McRae Solicitors LLP

Defender

Jonathan Brown

Defender

Procedural Posture

Commercial Action (court of Session, Scotland) / Debate on Relevancy (pleadings)

Legal Issues

  1. 1 Are the success fee elements of the agreements between the pursuers and defenders illegal and unenforceable as pacta de quota litis?
  2. 2 Did the defenders breach fiduciary duties in deducting and paying disputed fees from client funds?
  3. 3 Do the pursuers have title and interest to sue for declaratory and pecuniary remedies?

Ratio Decidendi

The success fee elements of the agreements are pacta de quota litis because they provide for fees to be increased by a percentage calculated by reference to the fruits of the litigation, which is prohibited by Scots law and contrary to public policy. Such arrangements are illegal and unenforceable. The defenders' arguments that the arrangements are speculative or conditional fees are rejected as the fees vary in proportion to the amount recovered, not merely on success. The pursuers' averments of breach of fiduciary duty and knowing receipt are sufficient for inquiry and not irrelevant at this stage. The second pursuer has title and interest to seek declarators. The defenders' pleas of...

Court Disposition

Success fee elements of the agreements declared illegal and unenforceable as pacta de quota litis; case to proceed to inquiry on remedies and fiduciary breach.

Orders

  • Declarator that the success fee elements of the agreements are illegal and unenforceable.
  • Case to proceed to proof before answer (inquiry) on pecuniary remedies and breach of fiduciary duty.