The Perils of Paying Claimants Directly

In this article, our Senior Associate, Nick Parkinson explores the recent decision of The Supreme Court of the UK in the matter of Bott & Co Solicitors Ltd (Appellant) v Ryanair DAC (Respondent). 

The Supreme Court held that law firm, Bott & Co, were entitled to the benefit of an ‘equitable lien’ in relation to legal services carried out when conducting Reg 261 claims.  The key point to take away from this decision is that airlines ought to ensure that, when UK solicitors are acting for a Claimant, any compensation payments ought to be sent to the solicitors rather than the Claimants directly.  This applies irrespective as to whether or not the claim has been litigated in the courts. 

Why does this matter? 

Typically, Claimant lawyers operate on the basis that they will deduct a percentage, say 45%, from any successful compensation recovered from airlines when bringing a Reg 261 claim.  If, however, the compensation payment is sent to the Claimant directly, the Claimant’s lawyer may find it difficult or impossible to then acquire their 45% fee from their client.  By making payment directly to a Claimant, law firms such as Bott & Co will say that this conduct has ‘interfered with their equitable lien’ and seek payment from the airline to account for their shortfall (45% or otherwise).  Airlines will therefore end up paying the Claimant in full for any compensation, plus any court fees and legal costs, only to then be stung by another claim from the Claimant’s law firm for a sum equivalent to around 45% of the compensation!

Is This Only Relevant to Reg 261 claims?

Not at all.  The principle applies to any claim when dealing with Claimant law firms in the UK.  

What Next?

It should be said that this was a hard fought battle to the very end.  The Court of Appeal held in favour of Ryanair, and the decision in the Supreme Court is not without controversy – with 3 Judges ruling in favour of Bott & Co, but with 2 Judges in favour of Ryanair.  A decision of the Supreme Court, however, leaves no scope for further appeal or challenge from Ryanair.  At least, not on this particular point, and not in the UK.

If you have any feedback on this article, or looking for help on a similar issue, contact Nick Parkinson at

nick@travlaw.co.uk

or call

0113 258 0033

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