Promoting access to justice: the solicitor’s equitable lien

On 16 March 2022, the Supreme Court modernised the law relating to solicitors’ equitable liens in Bott v Ryanair. This remedy has been recognised as promoting access to justice, enabling solicitors to offer litigation services while acting on risk for clients who may not otherwise be financially able to bring meritorious claims. The judgment is a positive step towards enabling those with fewer resources to enforce their rights through the justice system.

What is an equitable lien?

The solicitor’s equitable lien has existed for over 200 years and allows recovery of solicitors’ costs from financial awards obtained on behalf of their clients in the course of litigation. It operates in circumstances where the client’s opponent pays the financial award directly to the client, while on notice of the solicitor’s interest, and the client fails to pay the solicitor’s costs. The Court may then order the opponent to pay the solicitor’s costs on top of the financial award itself. The lien exists in order to incentivise solicitors to represent those who cannot afford to pay for their services upfront.

What was the issue?

The solicitor’s equitable lien was developed in different times. Traditionally, it only arose where money was recovered in the context of formal court proceedings. But this no longer fits with the modern emphasis on alternative dispute resolution, and the principle that litigation should be a last resort.

Over time, the doctrine has been extended, first to include sums paid through arbitration or settlement, and then to include sums paid through settlement before formal proceedings had even been issued.

Most recently, a new set of facts challenged the traditional scope of the lien. The case before the Supreme Court involved a solicitor’s firm, Bott, which handled a very large volume of low value flight delay compensation claims. Bott would assess the merits of each claim, and in appropriate claims, write to airlines on behalf of its clients seeking compensation. If successful, compensation would be paid straight to Bott on behalf of its clients. In 2014, however, Ryanair, a frequent target of such claims, decided to pay Bott’s clients directly, despite knowing Bott’s involvement.

The question before the Supreme Court was whether Bott could be said to have an equitable lien over the compensation paid by Ryanair directly to its clients, such that Ryanair could be ordered to pay Bott’s fees on top of the compensation it had already paid to Bott’s clients. This might have been a straightforward question had Bott represented its clients in the context of complicated disputes with airlines. Instead:

  1.  in the vast majority of Bott’s cases there was very little likelihood of dispute because the “liability to pay compensation for flight delay is almost axiomatic”;
  2.  the amount of compensation payable by the airlines was almost always determined solely by the length of the delay and flight distance, so there was little room for argument; and
  3. there was no evidence to suggest that Ryanair had sought to avoid its obligations to inform passengers of their rights to compensation or to pay out.

Bott argued that an equitable lien would exist where the following cumulative criteria were met:

  1. a contractual liability on the part of the client to pay the solicitor’s fees;
  2. the recovery of money or property which is owed to a significant extent to the solicitor’s services; and
  3. that the defendant has notice or knowledge of the solicitor’s interest in the debt.

What did the Supreme Court decide?

Although the Supreme Court was split, all agreed that the “key to fixing the boundary” of the solicitor’s equitable lien is the underlying purpose of promoting access to justice. Lord Leggatt and Lady Rose (the minority), however, held equitable liens should only arise where the solicitor’s services are provided in the context of an actual or prospective dispute. Lord Burrows, Lady Arden and Lord Briggs (the majority), on the other hand, thought it sufficient for the solicitor’s services to be provided in the context of a claim asserting a legal entitlement.

The majority took the view that restricting the lien to actual or prospective disputes would put the solicitor in the difficult position of needing to know “in advance of providing particular services […] whether or not it will be entitled to an equitable lien if there is a successful outcome. The solicitor cannot know whether claims will or will not be disputed by the other side”. As such, the minority’s approach could have a chilling effect on the provision of legal services to those who cannot afford them upfront. Lord Briggs noted: “the disproportionate cost of having to engage solicitors […] for the pursuit of small or moderate claims is, if anything, the biggest single impediment to access to civil justice in England and Wales […] any methods by which solicitors can assist in reducing that disproportionality […] are in principle likely to serve the cause of access to justice”.

Further, the majority found that their approach would not extend the solicitor’s equitable lien to transactional work. The rationale behind this was perhaps set out most clearly by Lord Briggs, who said: “there must be something about the way in which the solicitor communicates with the third party which reveals that a solicitor’s retainer is to pursue a claim, rather than to conduct a transaction, or carry out some other type of work. A typical pre-action letter will do just that, but not a reminder to pay on time, sent by a solicitor at the end of a transactional retainer”.

Impact of the decision

The decision of the Supreme Court in this case is significant because it has established that solicitors will have an equitable lien where services are provided to clients in relation to the making of claims for compensation. The judgment has made it clear that there is no further requirement for the services to have been provided for the purpose of resolving an existing or reasonably anticipated dispute.

The reality is that, in many cases, claimants cannot bring claims for compensation of a breach of their rights without the assistance of legal advice. Indeed, in certain circumstances, claimants may not even know that they have a claim absent considerable work on the part of law firms. If defendants can set up private redress schemes which prevent solicitors from being paid, it will not be viable for law firms to investigate and pursue such claims. The judgement of the Supreme Court is helpful in ensuring that this does not happen.

Most importantly, it is encouraging to see that the principle of promoting access to justice was at the forefront of the Supreme Court’s thinking in the context of this case. As the justice system evolves over time, and approaches to pursuing redress adapt, it is of paramount importance that the more vulnerable members of society are not left behind. Protections like the solicitor’s equitable lien are a small but important part of this picture.

Full judgment Bott v Ryanair