The Supreme Court in London recently considered the airline’s shift to cut out the middle-man on flight delay compensation claims.
The appellant is a solicitors firm specialising in high volume / low-value claims for compensation for delayed and cancelled flights, generally on a “no win, no fee” basis.
It was the done thing for clients’ compensation to be paid directly into the appellant’s client account. They would retain their agreed costs and then pay the balance to their client.
In 2016, Ryanair began dealing with the appellant’s clients directly. This included paying any compensation to the client rather than through the appellant.
The reality was that about 30% of these clients neglected to pay the agreed costs to the appellant. Averaging £95 per claim, it was not feasible for the appellant to take legal action to recover.
Solicitor’s equitable lien
The appellant sued:
- claiming a solicitor’s equitable lien over the compensation payments in respect of its costs and
- seeking an injunction to restrain Ryanair from making direct payments to its clients
A solicitor’s equitable lien:
…is a judge-made remedy, motivated not by any fondness for solicitors as fellow lawyers or even as officers of the court, but rather because it promotes access to justice. Specifically it enables solicitors to offer litigation services on credit to clients who, although they have a meritorious case, lack the financial resources to pay up front for its pursuit.per Lord Briggs in Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd  UKSC 21 at §1
The High Court held that a solicitor’s equitable lien could only come into play once proceedings had actually been issued. Where compensation is paid out before proceedings have commenced, the question of a lien would not arise.
Court of Appeal
On appeal, the appellant’s case still failed because, until such times as Ryanair disputed a claim, the services provided by the appellent “…must still be recognisable as litigation services, promoting access to justice” to engage a solicitor’s equitable lien.
The appellant further appealed to the Supreme Court.
…there is no doubt that the solicitor’s equitable lien can arise where no formal proceedings have been commenced. The question… is where the boundary of the equitable lien lies and, specifically, whether the lien covers costs charged to clients by the appellant solicitors… for claiming compensation for flight delays from the respondent…Lord Liggett and Lady Rose (dissenting) at para. 3
The appropriate test to be applied 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.
By a 3:2 majority, the appeal was allowed.