Whilst the Old Licence was a welcome step when issued, significant uncertainty arose from various ambiguities in its drafting.
The New Licence addresses some of these ambiguities but leaves others outstanding. It also implements
Structure of the New Licence
Subject to certain conditions, the New Licence permits lawyers to receive payments from and make payments on behalf of clients who are designated under the
As was the case with the Old Licence, the New Licence is split into two parts: one concerning legal work carried out in satisfaction of an obligation entered into prior to designation (Part A) and one concerning legal work not carried out in satisfaction of such an obligation (Part B). Each part has a separate cap on the amounts that may be paid. Part B also imposes limits on hourly rates that may be charged by solicitors and barristers.
Welcome clarifications
The primary purpose of the New Licence is to respond to continuing volumes of applications for specific licences relating to legal fees. However, the OFSI has also taken the opportunity to resolve two points of uncertainty that arose from the wording of the Old Licence.
The first related to whether the Old Licence applied in circumstances where the caps had not been exceeded but it was estimated that they would be exceeded in due course. In VTB Commodities Trading DAC v
The second related to the circumstances in which the separate caps in Parts A and B could be combined. There was no text in the Old Licence providing explicitly for this, but the OFSI blog post accompanying that licence stated:
".[the] two caps can also be combined, meaning if work is undertaken for a designated person that involves fees for legal work carried out in satisfaction of a prior obligation (Ł500,000 limit) and work commenced post-designation (Ł500,000 limit), up to Ł1 million (inc. VAT) could be paid."
Foxton J in
Remaining uncertainty
Some of the areas of uncertainty identified by Foxton J in
Foxton J noted (paragraph 31(vii)) that it was unclear under the Old Licence whether multiple caps were available where a law firm or barrister undertook different, or separate but related, matters for the same client. However, he considered it clear at least that work done pursuant to a single letter of engagement would attract a single cap. The wording in the Old Licence on which Foxton J based his observations (the definition of "Legal Services", paragraph 5 of its Part A, and paragraph 4 of its Part B), is reproduced in the New Licence (the equivalent definition of "Legal Services", paragraph 4 of its Part A, and paragraph 3 of its Part B) without material changes. Whilst the reference in the New Licence to "individual matters within the Legal Services" (see above) would assist a judge in identifying the best interpretation, it would not be determinative.
Foxton J also noted (paragraph 34) that it was unclear under the Old Licence whether fees for a barrister instructed after designation by solicitors acting under a pre-designation engagement would fall under Part A or Part B. This issue is not addressed in the New Licence.
Finally, Foxton J noted (paragraph 35) that, under Part B of the Old Licence, there was no explanation of how barristers' brief fees or contingent fees are to be treated. The New Licence does not address these issues either.
SLAPPs
Whilst the Old Licence applied to "legal services.in relation to any matter", the New Licence applies to "legal services.in relation to any matter except a claim for defamation or malicious falsehood".
This should be read with the OFSI blog post accompanying the New Licence. It refers to recently stated
The New Licence going forward
It appears likely that, in the near future, the
Click here for the New Licence and here for the accompanying OFSI blog post.
Click here for the Old Licence and here for the accompanying OFSI blog post.
Click here to access the judgment of Foxton J in
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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