Fixed Success Fees: Challenges and Exceptions
If you have entered into a Conditional Fee Agreement (“CFA”)1
with your Client then you should be able to recover a success fee on
your profit costs which can be claimed from the Paying Party on the
successful conclusion of the substantive claim. How much you get is
dependent upon the circumstances of the case and the risks involved in
taking on the matter.
Until the recommendations contained
within the Jackson Report are brought in and the Legal Aid, Sentencing
and Punishment of Offenders Bill is enacted, success fees remain
generally recoverable from the Paying Party. Consequently, it is still
essential to know what percentage of success fee you can expect to
recover.
Part 45 of the CPR fixes the success fee which is recoverable following claims
2 involving Road Traffic Accidents3, Employer's Liability
4 and Employer's Liability Disease5 matters. Where Part 45 applies and the claim settles prior to the commencement of Trial6, Solicitor's can expect to recover the following:
Solicitor’s Fixed Success Fees Table.
|
Type of Claim
|
CFA
|
CCFA
|
|
Road Traffic Accident
|
12.5%
|
12.5%
|
|
Employer's Liability
|
25.0%
|
27.5%
|
|
Employer's Liability Disease – Type A
|
27.5%
|
30.0%
|
|
Employer's Liability Disease – Type B
|
100.0%
|
100.0%
|
|
Employer's Liability Disease – Type C
|
62.5%
|
70.0%
|
Counsel's expected recovery depends
on which track the case has been allocated to and the date of
settlement. When calculating the date of settlement, the date fixed for
Trial is not included. The following table sets out Counsel's success
fees under Part 45:
Counsel’s Fixed Success Fees Table.
|
Type of Claim
|
Pre-Allocation
|
Fast Track
|
Multi Track
|
|
More than 14 days to Trial
|
Less than 14 days to Trial
|
More than 21 days to Trial
|
Less than 21 days to Trial
|
|
Road Traffic Accident
|
12.5%
|
12.5%
|
50.0%
|
12.5%
|
75.0%
|
|
Employer's Liability
|
25.0%
|
25.0%
|
50.0%
|
25.0%
|
75.0%
|
|
Employer's Liability Disease - Type A
|
27.5%
|
27.5%
|
50.0%
|
27.5%
|
75.0%
|
|
Employer's Liability Disease – Type B
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
|
Employer's Liability Disease – Type C
|
62.5%
|
62.5%
|
62.5%
|
62.5%
|
75.0%
|
Section II of Part 45 allows for recovery of a 12.5% success fee on top of predictive costs
7 where a Conditional Fee Agreement has been entered.
There have been various attempts to challenge the fixed success fees provided for in Part 45
8,
however, the following case law indicates that where Part 45 applies,
the Court does not have discretion over the amount of success fee
allowed:
Kilby v Gawith [2008]11
-
Court: Court of Appeal (Civil Division)
-
Judges: Sir Anthony Clarke MR, Lady Justice Arden DBE, Lord Justice Dyson and Master Hurst
-
Circumstances: the claim arose following a Road Traffic Accident. The Claimant had Before the Event Insurance12
available which could have been used to fund the claim, however, the
Claimant chose to enter into a Conditional Fee Agreement and claimed a
success fee. The Defendant disputed the success fee calculated in
accordance with the predictive costs regime provided for by Section II
of Part 45 on the basis that it was unreasonable for the Claimant to
enter into a CFA when BTE was available.
-
Considerations: the
Court considered the applicability of Part 44 to the predictive costs
regime and the terminology used within Part 45. Consideration was given
to the meaning of the words and the case of Lamont. The Court reviewed
the language used in relation to the Disbursements and compared it to
the language used for the success fee. The Court also looked at whether
it was necessary to show that the costs had not been unreasonably
incurred to recover them.
-
Held: there was no
discretion to disallow the success fee. Section II of Part 45, provided
that a success fee may be allowed if there was a CFA, there was no
question of reasonableness. It was clear that the Court had a discretion
in relation to the Disbursements allowed, however there was no
corresponding discretion in respect of the success fee. If a CFA had
been entered, regardless of whether it was reasonable to enter the
Agreement, a success fee could be claimed. Rules 44.3 and 44.4 were
found not to directly apply to Section II of Part 45. Obiter Judgement
was provided which stipulated that it was evident that the same rules
would apply to Section III of Part 45 and by analogy also to Employer's
Liability and Employer's Liability Disease claims.
Lamont v Burton[2007]10
-
Court: Court of Appeal (Civil Division)
-
Judges: Lord Justice May, Lord Justice Dyson and Lady Justice Smith
-
Circumstances: the
claim arose following a Road Traffic Accident. Whilst the claim had
settled at Trial, the Claimant narrowly failed to beat the Defendant's
Part 36 Offer. Judgment was for £1,774.32 whilst the Defendant's offer
had been in the sum of £1,800.00. The Deputy District Judge awarded the
Claimant his costs up to the latest date on which the Part 36 payment
could have been accepted without requiring the permission of the Court. A
success fee of 100% was allowed which the Defendant appealed against on
the basis that the Deputy District Judge was not bound by Rule 45.16(a)
but had a discretion to award a different percentage, namely 12.5%.
-
Considerations: the
Court considered whether there was discretion to award a success fee of
less than 100% because the Claimant failed to beat a Part 36. The
relevant rules in Part 44 and 45 were analysed and the background to
Section III of Part 45 was considered. The Court contemplated the
different Costs Orders which could be made at the conclusion of a Trial
and the effect of failing to beat a Part 36 offer.
-
Held: the Court had
no discretion to award a lower success fee than that provided for in
Part 45. Whilst a Claimant who goes to trial has no right to costs until
they are awarded to him, the court has a wide discretion under rule
44.3 to make whatever costs order it considers appropriate in the
particular circumstances of the case, taking account of the various
factors specified in the rule. However, the Court cannot use Part 44 to
circumvent the mandatory provisions of Part 45, e.g. by directly
awarding a different success fee under Part 44 or indirectly by awarding
the Claimant a proportion of his costs calculated to lower the success
fee. It was accepted that there may well be a case for deciding that,
where a Claimant fails to better a Part 36 offer, he should be allowed
the same success fee that he would have recovered if he had accepted the
offer, however, it was decided that this was not the effect of the
Rules in their current form.
Nizami v Butt [2006]9
-
Court: High Court of Justice, Queen's Bench Division
-
Judge: Mr Justice Simon (sitting with Master Hurst and Mr Jason Rowley as assessors)
-
Circumstances: the
claim involved a dispute to the success fee calculated in accordance
with the predictive costs regime provided for by Section II of Part 45.
-
Considerations: the
Court reviewed the position in relation to predictive costs
calculations. The Court considered the intentions underlying Rule
45.7-14 and decided that it created an agreed scheme of recovery which
was certain and easily calculated. Whilst fixed levels of remuneration
were created which might over-reward in some cases and under-reward in
others, taken as a whole, the levels were fair. Consequently, the
indemnity principle does not apply to fixed costs.
-
Held: whilst the
Disbursements could be assessed by the Court, the levels of the profit
costs and success fee were fixed by the CPR. In cases falling under CPR
45 Section II, the receiving party does not have to demonstrate that
there is a valid retainer between the solicitor and client just that the
conditions laid down under the Rules have been complied with.
Exceptions to the Rules
There are exceptions to the fixed
success fees, and an application can be made for an alternative
percentage if the case's circumstances allow. However, it is worth being
careful with any application because sanctions can be applied in the
event that the success fee fails to be assessed at sufficiently
higher/lower than the fixed fees! The qualifying criteria differ
depending on the type of claim.
Road Traffic Accidents
An application can be made under Rule
45.18 for a success fee greater or less than the fixed fee provided
that the following criteria are met:
Rule 45.18 (2)...
|
|
|
(a)
|
the parties agree damages of an amount greater than £500,000 or the court awards damages of an amount greater than £500,000; or
|
|
|
(b)
|
the court awards damages of £500,000 or less but would
have awarded damages greater than £500,000 if it had not made a finding
of contributory negligence; or
|
|
|
(c)
|
the parties agree damages of £500,000 or less and it is
reasonable to expect that if the court had made an award of damages, it
would have awarded damages greater than £500,000, disregarding any
reduction the court may have made in respect of contributory negligence.
|
|
However, if the success fee is
assessed between 7.5% and 20%, the fixed success fee will apply and the
costs of the application and of the assessment shall be paid by the
applicant.
Employer's Liability Claims
An application can be made under Rule
45.22 for a success fee greater or less than the fixed fee provided
that the criteria under Rule 45.18 (as above) are met.
Take heed, if the success fee is
assessed between 15% and 40%, the fixed success fee will apply and the
costs of the application and of the assessment shall be paid by the
applicant.
Employer's Liability Disease Claims
An application can be made under Rule
45.26 for a success fee greater or less than the fixed fee provided
that the criteria under Rule 45.18 are met with the sum of £500,000.00
being substituted for £250,000.00.
Warning: the fixed success fee will apply and you will be liable for the costs of the application and the assessment where:
-
Type A Claim: success fee assessed between 15% and 40%
-
Type B Claim: the percentage increase is assessed between 75% and 100%
-
Type C Claim: the percentage increase is assessed between 50% and 75%
1 As per the definition contained within Rule 43.2(1)(k)(i) of the CPR
2 Which is not a claim which would be allocated to the Small Claims Track
3 Where the accident occurred after 6th October 2003 and Sections II and VI of Part 45 do not apply
4 Where the accident occurred after 1st October 2004
5 Where the letter of claim containing a summary of the facts on which the claim has been based was sent after 1st October 2005
6 Please see our article, Success Fees: Has Your Trial 'Commenced'? for further information regarding when a Trial is deemed to have commenced
7 See out Predictive Costs Flowchart for further information
8 Including under Section II
9 EWHC 159 (QB)
10 EWCA Civ 249
11 EWCA Civ 812
12 “BTE”