The Court of Appeal’s decision in Herbert v HH Law
] has now arrived and many law firms across the country will be taking stock to review the decision and their respective practices for entering into CFA’s and their method of assessing a success fee.
There have been a number of cases of late where the costs charged to a successful Claimant have been challenged, but this case goes to the heart of the level of success fee that should be applied and whether or not an ATE policy should be considered as a solicitor’s disbursement.
Ms. Herbert was injured in a rear end shunt accident in October 2015. The claim commenced in the portal, proceedings were issued, before the claim settled for the sum of £3,400.
HH Law had applied a 100% succeed fee to the case under their CFA, to be capped at not more than 25% of the damages recovered. Ms Herbert £829.21 was also charged £349 for the ATE premium.
The Claimant challenged the fees and deductions applied by HH Law and the central issues that had to be determined by the court were:
- Should the Claimant give informed consent when considering the level of success fee uplift to be applied by solicitors instructed?
- Should the ATE premium be considered a solicitor’s disbursement or not?
So, on to the Court of Appeal with the Master of the Rolls giving Judgment.
Court of Appeal
It was held that the solicitor has the burden of showing that the client has given informed consent and that the business model of setting the success fee at 100% in all cases, subject to the 25% cap, was not fair or reasonable, as it was not set in relation to the litigation risk for the particular case.
As to the ATE policy premium, this was not a solicitor’s disbursement, but a premium on a policy of insurance under which the client is insured pursuant to a contract between the client and the insurer. As such, it should not be included in the solicitor’s bill, but should simply be shown on a separate cash account.
The Fall Out
Since LASPO, it is believed that many firms will have adopted the same charging model and applied a 100% success fee across the board, irrespective of the litigation risk in each case, even where the individual risk was low. So unless the client was advised at the outset that the success fee was not set on the basis of the risks of the case, the client may now be able to reduce the success fee on a Solicitors Act assessment.
As to an After the Event Insurance policy premium, the judgment means that a client cannot challenge the premium on assessment.