Court Assesses Solicitor Success Fee at 15% for Protected Party Claim

AKS V NATIONAL FARMERS UNION MUTUAL INSURANCE SOCIETY LIMITED [2025] EWHC 126 (SCCO)

Costs Judge Leonard reduces Seth Law’s success fee from £73,750 to £16,502.64 in a protected party case, highlighting the critical requirement for informed consent and proper risk assessment in contingency fee agreements, with the firm now facing potential unrecoverable overpayment due to its compulsory liquidation.

The law requires that before any success fee is deducted from the Claimant’s damages, it must be assessed by the court. Seth Law’s success fee must not only comply with the contractual terms of the CFA but also be reasonable in amount and justified by a genuine risk assessment, which, in this case, it clearly was not.

Citations

C v W [2008] EWCA Civ 1459 Success fees under conditional fee agreements must reflect the actual risk to the solicitor of going unpaid at the time the agreement is made. A success fee set without adequate consideration of this risk can be subject to reduction. Herbert v HH Law Ltd [2019] EWCA Civ 527 Informed consent for success fees under conditional fee agreements requires a full and fair explanation of the reasons for the percentage set. Without this explanation, the presumption of reasonableness under CPR 46.9(3)(b) may be rebutted.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

Where money is ordered or agreed to be paid to a protected party, the court must conduct a detailed assessment of the costs payable by, or out of the money belonging to, the protected party. This assessment is required even where costs are deducted from damages recovered by the protected party. [9-10]
Success fees under Conditional Fee Agreements (CFAs), which are payable from a protected party’s damages, are subject to detailed court approval to ensure they are reasonable and comply with CPR 46.4 and 21.12. [5, 8, 11, 20]
Solicitors seeking to deduct a success fee from a protected party’s damages must demonstrate that the success fee aligns with an adequate assessment of the litigation risk at the time of entering into the CFA. Failure to do so renders the claimed success fee vulnerable to significant reduction. [49, 51-57]

The statutory cap on success fees for claims involving protected parties (25% of specified damages categories) does not entitle solicitors to recover success fees automatically at that level where it exceeds what is reasonable and proportionate. The assessment must account for the actual risks and circumstances of the case. [41-43, 49-57]
Costs orders directing the detailed assessment of solicitor-client costs are binding, and neither the approval of a Court of Protection deputy nor the consent of a litigation friend can override the statutory requirement for court approval of such costs deductions. [19, 21, 25-27, 63]

Seth Law’s CFA success fee must reflect the risk to the solicitor at the time of the CFA of going unpaid. Given the circumstances of the accident, Seth Law’s prospects of going unpaid were minimal. Even on the indemnity basis, a success fee above 15% is unjustifiable, and there is no evidence the Claimant or BXG gave informed consent to a 25% fee.

Key Findings In The Case

Seth Law improperly deducted a success fee of £73,750 from the Claimant’s damages without court approval, despite the statutory requirement under CPR 46.4 for such deductions to undergo a detailed assessment. The court determined that this sum was significantly higher than a reasonable amount, which it assessed at £16,502.64. [9-11, 59]
The court found that Seth Law’s Conditional Fee Agreement (CFA) set the success fee at 25% of their “basic charges” without providing informed consent or conducting a meaningful risk assessment at the time of entering the CFA. The lack of explanation or bespoke case analysis undermined the validity of the asserted success fee. [29, 51-58]
The settlement advice and basic charges documented in the bill of costs indicated that Seth Law’s contractual entitlement to a success fee was capped at £39,283.71, based on the assessed profit costs. By charging £73,750, Seth Law exceeded their entitlement under the CFA. [43, 49, 53]

Contrary to Seth Law’s interpretation, Judge Leonard held that neither the Claimant’s Deputy (Mrs Williams) nor the Litigation Friend (BXG) had the authority to unilaterally authorise the payment of the success fee without the required court approval under CPR 46.4. Their consent did not override the procedural safeguards in place to protect protected parties. [19, 63]
Due to Seth Law’s liquidation, any recovery of the £57,247.36 overpayment to the Claimant remains uncertain, despite the court’s finding that Seth Law must repay this sum. The judgment highlighted the regulatory issues leading to Seth Law’s closure and disciplinary sanctions against its principal solicitor. [24, 61, 64]

The September 2017 CFA defines 'win' widely, so that Seth Law will be paid if the Claimant derives any benefit whatsoever from her claim. Nor does the CFA incorporate any Part 36 risk for Seth Law. Given the circumstances of the accident, Seth Law’s prospects of going unpaid for any period were always minimal. Even on the indemnity basis, I cannot see that the circumstances could justify a success fee in excess of 15%.

Background

The case of AKS v National Farmers Union Mutual Insurance Society Limited involved a claim for damages following a road traffic accident in 2017. The claimant, AKS, was a protected party represented by Seth Law Limited. The proceedings concluded with a damages settlement of £3.7 million in November 2022. The settlement included an order for the defendant to pay the claimant’s costs, with the costs payable by the claimant to Seth Law subject to detailed assessment under the Civil Procedure Rules (CPR) 46.4(5) and CPR 21.12(1A) (now CPR 21.12(2)).

Costs Issues Before the Court

The primary costs issue before the court was the assessment of Seth Law’s success fee, which was claimed at 25% of the claimant’s award. The court needed to determine whether this success fee was reasonable and properly assessed under CPR 46.4. Additionally, there was a procedural issue regarding the court’s approval for any payment from the claimant’s damages to Seth Law.

The Parties’ Positions

Seth Law initially sought an assessment under CPR 47 and an award of a success fee of 25% of the claimant’s award. However, they later clarified that their application was for assessment between solicitor and client under CPR 46.4. The claimant’s deputy, Mrs Williams, had arranged a payment of £73,750 to Seth Law, believing it was within her discretion. The court, however, required a formal assessment to ensure compliance with legal procedures.

The Court’s Decision

The court determined that Seth Law’s success fee of £73,750 was excessive and not contractually justified. The court assessed the success fee at 15% of the basic charges, amounting to £16,502.64. Consequently, Seth Law was ordered to repay the overpayment of £57,247.36 to the claimant. The court’s decision was based on the lack of informed consent from the claimant or her litigation friend for the higher success fee and the absence of a proper risk assessment by Seth Law. The repayment, however, remains uncertain due to Seth Law’s compulsory liquidation.

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