A Conditional Fee Agreement (CFA), commonly referred to as a ‘no win no fee’ agreement, was introduced with a view to providing access to justice for Claimants.
The regime, when originally introduced, allowed for a Claimant to enter into a CFA with their chosen lawyer and, if successful, recover from the opponent in addition to their usual costs a success fee, which was calculated as a percentage of the costs incurred (up to 100%).
In a review by Lord Justice Jackson in 2009/2010, he recommended the removal of the right of a Claimant to recover success fees from Defendants upon success, as he viewed them as creating injustice for Defendants. As a result of Lord Justice Jackson’s report, the recoverability of success fees was removed.
Hirachand v Hirachand & Anor
Background
Subsequently, however, a judgment in the case of Hirachand v Hirachand & Anor carved out an unusual exception in terms of recovery of success fees. Hirachand confirmed that a judge could make an award for a Claimant to recover a contribution towards the success fee, not as part of their costs but rather as part of their award under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act).
The judge formed the view that this was possible as one of the factors that the Court should take into account when assessing the level of any award is the:
‘financial resources and financial needs which the applicant has or is likely to have in the foreseeable future’.
The Claimant successfully argued that she had a ‘financial need’ as there was a liability for the success fee that would arise once she was successful in her claim.
The decision
The original decision was affirmed by the Court of Appeal in 2021. The decision was appealed to the Supreme Court and judgment was handed down on 18 December 2024.
The Supreme Court overturned the previous decisions on the basis that there was no specific exclusion in the provisions removing the ability to recover success fees for a claim pursued under the 1975 Act and that to allow the position created by Hirachand in the earlier hearings would fly in the face of the public policy grounds set out by Lord Justice Jackson, when deciding that recovery of success fees should be abolished.
Comment
It is therefore now beyond doubt that Success Fees cannot be recovered from the opponent as part of an award in 1975 Act claims. This will no doubt be a blow to those currently in the midst of pursuing a claim pursuant to the 1975 Act but unfortunately, a change in the law over the course of a case is always an inherent risk in litigation.
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Kevin Modiri is a Partner in our expert Dispute Resolution team, specialising in civil disputes, insolvency, inheritance disputes, data breach claims and defamation claims.
If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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