Success Fee: Personal Injury Claims
Post LASPO Deductions and the Reasonableness of Staged Success Fees
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What is a Success Fee: Personal Injury Claims?
Success fees in personal injury claims arise on agreement between the Solicitor and Client under a Conditional Fee Agreement (CFA). Such agreements provide that if a case is successful, then Solicitors charge their Clients a percentage of the compensation award, in order to contribute to their costs. A success fee can be up to 100% of the base costs incurred, but is capped at 25% of specific elements of the compensation recovered. Whilst potential Clients may be apprehensive about success fees, it is important to note that Conditional Fee Agreements provide access to justice, allowing the Client to fund the claim without paying any upfront fees, and in the event of their case failing, no fees having to be paid whatsoever (save for in exceptional circumstances).
A success fee in personal injury claims (Road Traffic Accidents, Medical Negligence claims, etc) or other types of compensation claims is currently capped at 25% of general damages and past losses, and cannot be based on the total damages recovered which may include elements of future loss.
Many personal injury Solicitors also take out After the Event (ATE) insurance to supplement a CFA, in order to cover their Client’s risks of having to pay legal costs should they not be successful in a case. The costs of the insurance policy will usually be payable in addition to the 25% success fee.
The amount which a Solicitor may charge for a success fee in personal injury claims, and the terms of recovery, should be set out in the Conditional Fee Agreement. It may also be that the success fee can increase based on the position on the case and at different stages.
It is important to note that prior to April 2013, success fees could be recovered from a Defendant in any successful case up to a value of 100% of the base costs, and any deduction/cap as a proportion of damages only applies to post April 2013 (LASPO) matters.
Chocken v Oxford University Hospitals NHS Foundation Trust
The recent decision of Chocken v Oxford University Hospitals NHS Foundation Trust  EWHC 3269 (QB) in fact relates to a pre-April 2013 matter where a success fee was recoverable from the Defendant, and had been claimed at 80%. This decision could however, have important implications for any staged success fee deducted from client damages and which are subject to a Solicitor Client assessment.
The Senior Courts Costs Office assessed the reasonable amount of success fee in Chocken at 50% in this clinical negligence matter despite the Conditional Fee Agreement stating that this was to rise to 80% once proceedings had been served. The Senior Courts Costs Office decision was subsequently upheld by the High Court on appeal.
This was a case whereby causation and liability had been admitted by the Defendant pre-issue, and the only remaining issue to determine was quantum. On this basis, Master James at the Senior Courts Costs Office found that the service of proceedings did not increase the risks of the case, and that the amount of success fee should reflect the the risks involved in the case. Master James held that due to the high-value nature of the case (£2.8million in damages and then £85,000 payments per year thereafter) and also due to the severity of the matter, it was always very likely that proceedings would need to be issued, even with an admission of liability.
Master James went on to state:
‘…it may perhaps have been more reasonable to set a trigger at the point at which proceedings become contested, perhaps by imposing a trigger of X-amount of weeks after issue or X-amount of weeks after service, or indeed upon receipt of a fully pleaded defence.
“In my view, the defendant’s submission that you were in effect, setting a trigger that was more or less guaranteed to take effect, is one that I think has hit home.”
Master James, therefore, held that due to the limited risks involved in the case, the success fee should be set at 50% upon issuing proceedings.
This is a somewhat unusual decision, given that the reasonableness of a success fee should be considered based upon the risks at the time the CFA was entered. When this case was accepted by the Solicitor, they did not know that liability would be admitted, and so they quite sensibly staged the success fee to increase at certain trigger points in litigation. That said, the Master clarified their position that it was the nature of the trigger point to increase the success fee, that was inappropriate. In effect, issuing proceedings does not necessarily increase the risks of the case, but if instead the Solicitor had triggered the increased success fee on a denial of liability, or receiving a contested Defence, then this would have been more appropriate.
The Claimant Solicitor appealed the decision to the High Court, which was heard by Mr Justice Stewart.
Mr Justice Stewart rejected the argument that Master James used hindsight in considering that the Defendant admitted liability and breach of duty, stating that it was “inconceivable that she made an error of principle such as is alleged by the claimant”.
Stewart J went on to state that it was up to the Solicitor to decide on how and when to stage the success fee, of course with justification to the staging. Stewart J went on to state that Master James was correct in accepting a 50% success fee given the risks in the case. What Master James did not accept was that an increase in the success fee was justified at the chosen stage.
Stewart J held the following:
“[Master James] considered that 50% was reasonable up to a point close to trial. This was a decision she was entitled to make. In addition, she was concerned that in this case from the outset proceedings were likely, even if liability was conceded, such that the trigger could not be justified as reasonable.
“The central, though not only, risk of a CFA is total failure of the claim such that no costs will be recoverable…
“The master did not fail to take into account factors which she ought to have taken into account: nor did she give inadequate weight to any factors.”
For these reasons, it is unlikely that this matter will be taken to the Court of Appeal to consider the issue further, as the reasoning behind the reduction applied does not exhibit any hindsight having been applied.
How Can ARC Costs Assist?
As a team of specialist Costs Lawyers and Costs Draftsman, we can assist law firms, Solicitors, Legal Executives and Litigants in Person with any costs dispute, including those which arise as the result of success fee personal injury claims.
If you require a Bill of Costs to be prepared, we hold extensive experience in preparing your Bill and dealing with Costs Negotiations in order to obtain the maximum recovery possible for your costs. If an agreement cannot be reached through negotiations, we can settle Points of Reply and provide representation at any Detailed Assessment Hearing.
We are independent costs experts, and can also assisting paying parties in reducing the level of costs being claimed against them, which may require the settling of Points of Dispute.
Solicitor Client Assessments
As a Client if have been served with a Statute Bill from your Solicitor, which includes a Success Fee (Personal Injury Claims), we can assist with challenging those fees if you consider them to be unreasonable. For more information on how Legal Fees can be challenged, visit our article here.
If you are a Solicitor seeking to recover your success fee in personal injury claims or you are drawing up an initial Conditional Fee Agreement, we can advise on the risk assessments and merits of the level of success fee you wish to seek and also on the different stages on when the success fee can be increased. We can also advice on any prospective claim made against your Statute Bill.
If you wish to discuss your costs query with us, you may contact one of the team on 01204 397302 or by email at firstname.lastname@example.org. Alternatively, you may complete our enquiry form here, and one of our costs experts will contact you to discuss your query.
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