August 13, 2020

Landmark case under the Legal Services Act 2007

A judgment has been passed today in the High Court of Justice which provides the first review of what constitutes “a reserved legal activity” for the purposes of Legal Services Act 2007.

National law firm Clarke Willmott LLP acted for Designer M&E Services UK Limited, a specialist mechanical and electrical engineering sub-contractor, which carried out work on a development in Hackney in 2010 for a main contractor. Through an array of loan agreements and assignments a British Virgin Islands company, Ndole Assets Limited was left with the purported cause of action against Designer.

CSD Legal, a claims consultant, had save for one letter enclosing the Claim Form, done everything in these proceedings on behalf of Ndole. This included service of the proceedings on Designer.

Designer made an application to have the claim struck out on the basis that the actions of CSD constituted the conduct of litigation which is a reserved legal activity under Section 12 of the Legal Services Act 2007.

Designer argued that as CSD was not authorised to conduct reserved activities then service was invalid and the claim should be struck out.

Today the Judge held that steps taken by CSD (specifically service of the claim form) was a reserved legal activity, which CSD was not authorised to do.  However, as Ndole was acting as a litigant-in-person it was entitled to serve the claim form itself. Therefore, as CSD was acting effectively as Ndole’s ‘agent’, Ndole had delegated its own authority to serve the claim form to CSD.

Stephen Rosser, Chief Executive of Clarke Willmott LLP (representing the applicant/defendant) said: “Whilst claims consultants can and do provide an invaluable service, particularly in the construction industry, the Legal Services Act ensures clients are protected and insured when conducting litigation. We are concerned that this judgment will reduce the protection Parliament intended to afford clients.

“This is a disappointing result for clients. The rationale underpinning the Act is to ensure that those conducting litigation are regulated. This protects the clients in providing a strict professional code of conduct by which those who are regulated must abide.

“This judgment means that those who are unregulated may be able to bypass this and ultimately it will be clients who suffer.”

The code of conduct includes:

  • Mandatory insurance provisions;
  • Access to legal ombudsmen;
  • Regulation by the SRA; and
  • Ultimately access to the Solicitors Compensation Fund.

Clarke Willmott LLP is a national law firm with seven offices across the country, including Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.