Success Fees where Liability is not in Issue

We are often instructed to attack or defend bills in CFA funded cases which are not subject to the fixed success fee regime of Part 45 CPR, and so the amount of success fee is in dispute.

To recap the basics, the purpose of a success fee is to compensate the solicitor for the risk that they may go unpaid if the case is unsuccessful. Once the prospect of success and risk of losing have been quantified and expressed in percentage terms, the appropriate success fee is found by dividing the risk of losing by the chance of winning.                        

Each case has to be assessed on its merits without the benefit of hindsight, and the calculation is by no means an exact science. However, there is one situation where it is possible to be confident that the permissible success fee is likely to be low: where the only real risk is the risk that a Part 36 offer will not be beaten.

In C (a patient acting by her litigation friend Jocelyn Fox) v W [2008] EWCA Civ 1459 the Claimant had been injured in a road traffic accident; however the CFA in question pre-dated the provisions of Part 45. Liability had been admitted prior to the CFA being entered into. It was held that where the only real risk to the Claimant’s solicitor of not being paid was the risk that a Part 36 offer was made that was rejected on the solicitor’s advice and then not beaten, the appropriate success fee was 20%, reflecting a risk of 17%.

In C v W, the risk of losing on liability was negligible because liability had already been admitted. Contributory negligence was not a real risk because the Claimant’s solicitor’s would get paid even if a finding of contributory negligence was made. By analogy, the reasoning  of C v W can apply where judgment has been entered before entering the CFA, or where the evidence against the Defendant is known to be overwhelming at the outset.

The relevant clause in the CFA in C v W was very similar to the Law Society’s model form of CFA, and so the reasoning is likely to apply to most CFAs currently in use. Despite this, and despite the decision in C v W being almost four years old, we still see CFAs in similar circumstances where the success fee claimed falls in the 50-100% bracket.

If you see a claim for a success fee, whether your own or your opponents, which was set after liability had ceased to be in dispute, just think of C v W and ask: is this success fee realistic?