If you have made a Claim for injury since 2013 using solicitors who charge a success fee that is 100%, you might be due a refund.
A success fee is the amount a solicitor can charge for winning under a no win no fee agreement (technically known as conditional fee agreements or “CFA’s”). For CFA’s entered into after April 2013 the success fee is paid out of the winnings, subject to a cap of 25% of the winnings. A very few law firms, John Hodge Solicitors included, voluntarily reduce that cap to 10%, so clients keep more of their winnings.
Normally, most of the standard charges of solicitors are paid by the opponent and do not come out of the winnings, but that does not apply to the success fee.
The success fee is calculated as a percentage of the standard charges. The standard charges are normally calculated on the amount of reasonable time spent on the case applying an hourly rate for each lawyer working on the case, though often only one lawyer is working on the case. The Court has issued guidance on what hourly rates will not be challenged by them, putting the onus on the solicitor to justify a higher hourly rate, but unfortunately that hourly rate guidance has not been reviewed in over 9 years, so as time goes on it has become less and less useful.
It had been a requirement that when assessing the percentage of success fees, a risk assessment was carried out. Passengers injured in road traffic accidents for instance would expect to win from someone else with little or no blame attached to them. Typically a success fee of 10% - 15% was applied for that because the risk of losing was so low. Following the 2013 changes, risk assessment was not thought to be a strict requirement and some law firms stopped doing them and charged 100% in all cases.
The Court of Appeal have issued a Judgment in April 2019 to say that a client is due a refund if no proper risk assessment was carried out and, had it been carried out, it would have been lower. If the total bill would have been more than 20% lower it is worth taking the solicitor to Court on the issue because if more than 20% of their bill is deducted they normally have to pay the costs of the whole process. In the case the Court of Appeal were dealing with, the solicitors had charged a success fee of £829.21. That was based on 100% of their standard charges capped at 25% of the winnings. The Court reduced it to 15% of their standard charges and the Solicitor had to pay £4,500 for the client’s costs of having a new solicitor challenge the success fee.
There is one exception. If the client was clearly told that the success fee percentage was arbitrary and the client clearly consented to pay, then the client is likely to have the success fee upheld because it was an informed choice by them to pay more than the risk the solicitor was taking justified.
In fact the Judgment does not just cover 100% success fees. Any success fee which is too high without a proper risk assessment, where the client was not properly told that the figure was so arbitrary, can be challenged.
The time for a challenge is within one month from the date of the delivery of the bill but most Judges will allow a challenge up to a year after the bill was delivered. For challenges over a year after the bill was delivered there must be “exceptional circumstances”. Remember however that time starts to run from the date the bill was delivered to you.
For more information contact Stephen Mackie a Partner here at John Hodge Solicitors at stephen.mackie@johnhodge.co.uk
Amber Vincent
Naomi Drew