In Bott & Co Solicitors Ltd v Ryanair DAC  the Supreme Court was asked to decide what the limits are to the principle in Gavin Edmonson Solicitors Ltd v Haven Insurance Co Ltd , under which a solicitor can ask the Court to grant an equitable lien in order to protect their entitlement to fees as against their client.
Bott & Co were unsuccessful in convincing the High Court and Court of Appeal that it should have an equitable lien over the fees. However, on 16 March 2022 the Supreme Court found in Bott & Co’s favour by a majority of 3 to 2, with Lord Leggatt and Lady Rose dissenting.
Background to the case
Regulation EC 261/2004, (which remains part of retained legislation in the UK following Brexit), entitles airline passengers that suffer certain flight delays or cancellations to compensation.
In early 2016, where claims were admitted, Ryanair began paying compensation directly to claimants rather than to Bott & Co.
Bott & Co operate on a 'no-win no-fee' basis, with legal fees being deducted from the compensation paid into their client account by Ryanair, before the remaining balance is passed to the claimant. Where a Claimant was paid directly by Ryanair, Bott & Co had to then recoup their legal fees from their clients.
As the sums involved were relatively small per claimant, Bott & Co argued that it was not always commercial or practical to pursue individuals for payment of legal fees.
Why this case is significant for both airlines and solicitors
By virtue of this judgment, the Supreme Court has confirmed that where a solicitor provides services in relation to the making of a claim, provided the solicitor significantly contributes to the client’s successful recovery of compensation, it is possible for an equitable lien to arise in situations where court proceedings have not being issued or there is no dispute between the parties.
The judgment also notes that a claimant is able to seek compensation directly from Ryanair using a dedicated form on its website without having to incur any legal fees, and Lord Burrows opines that a reputable solicitor should first advise prospective clients of this option.
However, despite the ability of claimants to claim directly on Ryanair's website, the number of claimants seeking to instruct Bott & Co to recover compensation actually rose during this period. This suggested a preference for legal representation, even when a claimant is aware that this will result in lower compensation due to the deduction of legal fees.
Given the upturn in airline passengers as pandemic restrictions continue to lift, this judgment will be of interest to airlines and firms as they consider how best to handle future Regulation 261 claims.
Should you require any advice in relation to any aspect of Regulation 261 or for further information, please contact me or my colleagues Gillie Belsham or Anna Anatolitou in the Aviation team, or your usual contact at Ince, who will be happy to assist.
“assuming that the solicitor is acting for a potential claimant rather than a potential defendant, the appropriate test for a solicitor’s equitable lien is whether a solicitor provides services (within the scope of the retainer with its client) in relation to the making of a client’s claim (with or without legal proceedings) which significantly contribute to the successful recovery of a fund by the client. That seems to me to be the best interpretation of what Gavin Edmondson laid down. It is a clear and simple test to apply”.