Solicitors in personal injury and clinical negligence cases must be aware that success fees charged under conditional fee agreements can now be challenged. Recent court cases have found that simply stating a success fee percentage in a CFA does not prove it was properly approved if no individual risk assessment was conducted. Risk assessments must justify the fee based on the actual case characteristics rather than defaulting to standard rates like 25%. Failure to properly advise clients on funding arrangements including success fees and after-the-event insurance premiums puts solicitors at risk of fee reductions if agreements are assessed by the court.

1. CFAS
CHALLENGES TO SUCCESS FEES
WEB: WWW.QUICKCOSTS.CO.UK
EMAIL:
ENQUIRIES@QUICKCOSTS.CO.UK
TEL: 0161 260 4400
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2. CFA – Success Fees – The Jackson Reforms
 The Jackson Reforms (LAPSO) brought a number of changes to success fee.
o Applies to Conditional Fee Agreements “entered into” on/after 1 April 2013
o Prevented recovery of the success fee from the opponent
o Prevented recovery of insurance premiums from the opponent
o Introduced QWOCS protection.
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3. CFA – The Problems with Success Fees 1
 There are now a number of new services advising clients to go back and check
their legal fees were charged correctly. A new breed of claim are clients
challenging success fees (especially in PI and clinical negligence litigation) under
the Solicitors Act 1974 (section 70). This is causing a headache for the PI sector.
 Solicitors in the PI and Clinical Negligence sector must be aware of these issues
and plan accordingly. Contrary to popular belief there is no automatic right to
charge the client the standard 25% deduction from damages under LASPO, and
the success fee charged can be subject to an assessment . There may be a
problem where Solicitors have charged a success fee of 25%, particularly on low
value road traffic accidents, where no risk assessment was undertaken at the
outset of the case.
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4. CFA – The Problems with Success Fees 2
The benefit for the lawyers running these cases to challenge success fees, is that
often the looser pays the costs of the assessment and it may be only £500 or so
that is challenged and it may make it uneconomical to fight. The costs of any
assessment will be paid by the client unless the solicitor’s costs are reduced by
more than one fifth in which case the solicitor will pay the client’s costs of the
assessment process. This rule is subject to two exceptions: (i) where the
assessment is on application by the solicitor and the paying party does not
attend or (ii) where the court orders otherwise either as part of the order for the
assessment or where the circumstances in section 70(10) apply.
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5. CFA – Risk Assessment/Client Solicitor 1
• Herbert v HH Law Ltd [2018] EWHC 580 (QB)
o The client, who had been injured in a road traffic accident, had
entered into a CFA with the firm which provided that, if successful,
she was to pay its basic charges, disbursements, ATE premium and
100% success fee. The claim was submitted via the RTA portal and
the client accepted a Pt 36 offer of £3,400 plus costs. From that sum,
the firm deducted £1,178, comprising costs of £829 and an ATE
premium of £349. The client then instructed her current solicitor (JG),
which challenged the billed costs, contending, in particular, that the
firm had not conducted a risk assessment justifying the 100% success
fee.
o A district judge had been right to reduce a solicitor's success fee
from 100% to 15%. The fact that the client had entered into a
CFA which set out the success fee percentage did not mean that
they had approved that percentage within the meaning of CPR
r.46.9(3).
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6. CFA Risk Assessment 2.
 The court said in that case:-
 ‘15. I do not accept that any of those relevant factors are sufficient in addition to the
circumstances of the case, the nature of the claim, and the evidence from the Claimant
to justify an uplift of 100%. It is difficult to see in the circumstances of this case
known to the solicitors at the time that the CFA was to be entered into that an
uplift of much more than 12.5% could ever be justified. On the circumstances
described by the client the facts of the case was straightforward, the nature of the
injury was minor soft tissue damage and whiplash, there was no time off work, and it
was likely this case would be settled for a modest amount in a short period of time.’ In
the circumstances of the particular case, and allowing for the fact that the
‘modest’ disbursements were funded by the solicitors for a ‘fairly short’ period,
the appropriate success fee was 15%, namely £276 plus VAT = £331.20.

7. CFA – Risk Assessment/Client Solicitor
Challenges are emerging to the success fe
• A and M v Royal Mail Group [2015] EW Misc B24 (CC)
• The court refused an application for success fees and after the event insurance
premiums to be paid out of damages obtained by children in a personal injuries
settlement. The solicitors had failed to carry out a risk assessment of the
prospects of winning and had failed to adequately advise the litigation friend
about funding arrangements or why the funding model had been employed, or to
give details of any agreed costs.
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8. Risk Assessment Solicitor/ Client
 The Court said in that case:-
 "In his final report Sir Rupert Jackson recommended that General Damages recovered in a case
where a CFA was entered into after 1 April 2013 should be increased by 10% to compensate any
Claimant for the additional irrecoverable expense of a success fee. Following the Court of Appeal
decision in Simmons v Castle that enhancement has taken effect. The skeleton argument from
Scott Rees in this case refers to the quote from the economic assessor to Sir Rupert Jackson’s
Inquiry, Professor Paul Penn, that the increase in general damages will in the great majority of
cases leave Claimant’s no worse off. That clearly demonstrates that it was not within the
contemplation of either Sir Rupert Jackson or Professor Penn that the success fee would
always be equivalent to 25% of the damages or indeed that that would be the norm. On the
contrary it would appear that it was contemplated that the success fee would seldom be
equivalent to 25% of the damages"

9. Risk Assessment - Some Practical Tips 1
 Some practical tips:-
 Ensure each case has a risk assessment as to how the success fee was reached on
each case. The risk assessment must be tailored to the facts.
 Ensure the risk assessment is signed off by a senior lawyer and can be justified.
 Even RTA cases should be subject to a risk assessment.
 Consider whether on for example a passenger RTA needs to charge a success fee
of 25%. Some Courts will only allow 5% see A & B -v- The Royal Mail
Group [2015]

10. Risk Assessment - Some Practical Tips 2
 If your firm is faced with a claim see section 70 - the powers are limited:-
 “Where an application under subsection (2) is made by the party chargeable with the bill—
 (a) after the expiration of 12 months from the delivery of the bill, or
 (b) after a judgment has been obtained for the recovery of the costs covered by the bill, or (c) after the bill has
been paid, but before the expiration of 12 months from the payment of
 the bill.
 no order shall be made except in special circumstances and, if an order is made, it may contain such terms as
regards the costs of the assessment as the court may think fit.” (emphasis added).
 6. If the success fee changes, make sure the client is updated.
 7. Make sure the basis and level of the success fee, is properly explained to the client at the outset of the case.
 8. Also consider ATE on low value RTA cases - especially minor cases- is the premium reasonable as compared to
the risk? The client must be advised.

11. CFAS
CHALLENGES TO SUCCESS FEES
WEB: WWW.QUICKCOSTS.CO.UK
EMAIL:
ENQUIRIES@QUICKCOSTS.CO.UK
TEL: 0161 260 4400
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