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The Court of Appeal considered two issues relating to law firm Candey's recovery of unpaid legal fees from the liquidators of its former client, Peak. The first (the exemption issue) was whether the liquidators were liable to pay a success fee due under a conditional fee agreement (CFA), or whether this was outside of the insolvency exemption in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No 5 and Saving Provision) Order 2013, SI 2013/77 and so prohibited. The second (the lien issue) was whether Candey had an enforceable solicitors' lien over its unpaid fees, or whether it had waived the lien when it took alternative security for its fees in the form of a charge over Peak's assets. The court held first that the insolvency exemption did not apply to the instant proceedings, and so it was precluded from ordering the liquidators to pay the success fee, and secondly that Candey had waived its lien by entering into alternative, inconsistent security arrangements with Peak without reserving its lien. Written by Alex Jay, partner at Gowling WLG (UK) LLP, and Christopher Richards, PSL principal associate at Gowling WLG (UK) LLP.
Candey Ltd v Crumpler and another (as joint liquidators of Peak Hotels and Resorts Ltd (in liquidation))  EWCA Civ 26
The exemption in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No 5 and Saving Provision) Order 2013, SI 2013/77 allowing for the continued inter partes recoverability of success fees will be restrictively construed. Liquidators acting as foreign representatives in cross-border insolvencies will not be subject to the exemption and so cannot recover success fees (nor can their opponents recover against them). This exemption has in any event now been removed, so this impact will be felt in a diminishing number of cases.
Solicitors asserting a lien must take care not to undermine that
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