Future of success fees in Conditional Fee Agreement cases changed by appeal judgement

A landmark Court of Appeal judgement has changed how cases on a Conditional Fee Agreement (CFA) should be treated, according to a legal expert at Thursfields Solicitors.

The leading Midlands law firm has commented following the eagerly awaited decision in Hirachand v Hirachand, relating to the recoverability of success fees for cases involving claims under the Inheritance (Provision for Family and Dependants) Act 1975.

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Suhail Sibtain, an associate solicitor in the Dispute Resolution team at Thursfields, explained that in CFA cases, a client’s costs usually become payable if the client ‘wins’ the case under a ‘no win no fee’ agreement.

However, this was limited to recovering base costs and any success fee under a CFA could not be recovered, as it was usually paid by the client from any damages or award they receive.

Suhail said: “This Court of Appeal decision has changed all of that, as the success fee can now be considered as part of the award.”

The claimant in the case, aged 50, made a 1975 Act claim against her father’s estate, which entirely passed to her mother in accordance with her father’s will.

The claimant had been estranged from the family since 2010 and had numerous financial needs, and the court ordered a 25% uplift as part of the award in view of her costs liability.

The decision was appealed on grounds relating to the recoverability of a success fee and also on the basis that the claimant’s mother – the defendant – was denied a fair hearing.

She was profoundly deaf and resident in a care home, requiring assistance from a care home worker throughout the hearing. She had persistently breached procedural requirements in filing documents.

Suhail said: “The appeal was dismissed, ruling that the defendant had not been denied a fair hearing, given that she was not allowed to participate in the hearing anyway due to numerous breaches. Therefore, her presence in the care home made no material difference.

“The court considered that if an award is made to meet a claimant’s financial needs but then that award is reduced due to the claimant’s costs liability to their solicitors under the CFA success fee, this would undermine the very nature and purpose of the claim.

“The Court of Appeal decided that the success fee could be classed as a debt by the claimant and therefore could be taken into consideration when assessing a claimant’s maintenance and needs.”

Suhail shared a word of caution for future cases, as it now seems likely that more claimants on a CFA will seek to recover some or all of the uplift as part of their award.

He added: “All cases are fact-specific and litigation lawyers should be aware that the judge in this case had very specific reasons for making his decision, and it may not always be appropriate for such an award.

“As part of its decision, the court will consider whether a CFA funding arrangement was necessary in the case and whether other options were explored.”

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Anyone needing any advice or guidance on Inheritance Act claims or disputing a will can contact Suhail Sibtain at SSibtain@thursfields.co.uk or by calling 0345 20 73 72 8.

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