The Senior Courts Costs Office’s decision in Evans v Fletchers Solicitors Limited [2026] EWHC 1523 (SCCO) concerned a solicitor and own client assessment under section 70 of the Solicitors Act 1974, in which the central issue was whether the defendant’s approach to investigating the availability of before the event legal expenses insurance had been adequate, and what consequences flowed from any failure in that regard for the recoverability of a success fee of £30,365.13.
Background
The claimant, Mr Peter Evans, had instructed the defendant, Fletchers Solicitors Limited, in connection with a personal injury claim arising from a road traffic accident in 2017. The claim was successfully resolved, with a compromise of £250,000 recorded in an order dated 14 July 2021. The costs as between the claimant’s solicitors and the opposing party were agreed separately, and the defendant then rendered a bill to the claimant in the sum of £61,615.13. That figure included a success fee of £30,365.13, which had been capped at 25% of the relevant damages in accordance with the Jackson Cap.
Mr Evans subsequently sought advice from JG Solicitors regarding the fees he had been charged. Those enquiries led to the issue of proceedings in the Senior Courts Costs Office, with Mr Evans seeking an assessment of the defendant’s bill. The proceedings raised challenges both to individual items in the bill and to the agreement of costs between the parties. However, the central issue before Senior Costs Judge Rowley was whether the case ought to have been funded by legal expenses insurance rather than a conditional fee agreement. The claimant’s position was that, had proper enquiries been made, he would have been able to use before the event legal expenses insurance held under his home insurance policy with Zurich Insurance Company, and that he would therefore not have been charged a success fee or an after the event insurance premium.
The claimant had signed a CFA on 24 April 2017. As part of that process, a form regarding possible funding options was completed by the claimant’s wife, which confirmed that the claimant had the benefit of family legal expenses insurance as an add-on to his home insurance with Zurich. The legal expenses element of that cover was managed by DAS Legal Expenses Insurance Company Limited.
The defendant’s file contained no record of any enquiries having been made of either Zurich or DAS in 2017. The judge found, on the basis of the absence of any evidence from the defendant’s witnesses on this point, that no such enquiries were made in 2017.
The fee earner who took over the file in May 2019, Ms Charlotte Mackulin, made enquiries at that stage in anticipation of court proceedings. Ms Mackulin asked her assistant to write to several entities identified on the LEI checklist completed in 2017. The response received from Zurich in June 2019 directed the defendant to a policy booklet, which was not in fact received, and provided a telephone number in bold print for further assistance. Ms Mackulin’s assistant sent a follow-up letter on 23 July 2019, the same day Zurich’s response was received, but no telephone contact was made despite the telephone number being prominently displayed in Zurich’s letter. Crucially, no direct contact was ever made with DAS, the actual legal expenses insurer. Ms Mackulin concluded that BTE cover had not been established after reasonable enquiry and wrote to the claimant accordingly. ATE insurance was then incepted.
Following settlement, JG Solicitors made enquiries of both Zurich and DAS. They obtained a copy of a renewal pack confirming that the claimant had held family legal expenses cover managed by DAS at the time of the accident. DAS confirmed by email in February 2022 that it had no record of having been contacted by the defendant at any point, either in 2017 or 2019. The defendant’s Head of Costs, Mr Gary Ratcliffe, then made his own enquiries, including consulting the DAS website via the Wayback Machine. He identified an FAQ entry stating that family legal expenses insurance would not cover motor-related matters. However, DAS declined to provide a definitive answer as to whether cover would have been available, maintaining that a full claim assessment would be required and that such claims needed to be made much closer to the date of the incident.
The defendant declined to refund the success fee and ATE premium on the basis that neither Zurich nor DAS had confirmed that coverage would have been available. The matter proceeded to a hearing on 1 July 2025, with judgment handed down on 19 June 2026.
The Post-2013 Funding Landscape
Challenges by unsuccessful defendant paying parties as to the claimant’s methods of funding had begun in earnest almost as soon as CFAs became prevalent following the introduction of the Access to Justice Act 1999 and the CFA Regulations 2000. These provisions made success fees and ATE premiums recoverable from an opponent and the use of them was therefore a more expensive option from the paying party’s point of view. The requirements of the CFA Regulations overlapped with regulatory requirements for solicitors to consider with their clients the options for funding their case. A failure to comply with the regulations resulted in the CFA being unenforceable by the solicitor against their client and consequently no indemnity against such costs needed to be provided by the opponent. Much of the difficulty with compliance was removed by the revocation of the CFA Regulations in 2005, but the need to advise the client of possible funding options remained as a matter of professional conduct. Arguments by paying parties in between the parties assessments are generally available to clients of solicitors in Solicitors Act assessments.
The proceedings arose in the context of the funding landscape following the reforms introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which removed the recoverability of success fees and ATE premiums from opposing parties in most personal injury cases with effect from April 2013. Since that change, the use of BTE insurance has generally been regarded as preferable for claimants, as it is not expected to require a success fee or ATE premium. The success fee charged in this case, at £30,365.13, represented a very substantial proportion of the total bill, making the funding question of considerable financial significance to the claimant.
The Five-Step Framework
Senior Costs Judge Rowley structured the analysis around five sequential questions. First, whether the defendant’s approach to enquiries into alternative funding had been unreasonable. Second, whether, if reasonable enquiries had been made, there would in fact have been LEI available for the claimant to use. Third, whether using the LEI would have meant that no deduction from the claimant’s damages would have been required. Fourth, whether the claimant would actually have used the BTE insurance had it been available. Fifth, what the consequences of the court’s findings on those questions should be for the costs payable by the claimant to the defendant.
The Parties’ Positions
The claimant’s position was that the defendant had failed to make any enquiries of the actual LEI provider, DAS, either in 2017 or in 2019. The enquiries that were made in 2019 were directed to Zurich, the home insurer, rather than to DAS, which was the entity responsible for managing legal expenses claims. The claimant argued that, on the balance of probabilities, BTE cover had been available and that, had he been properly advised, he would have used it. In support of that contention, Mr Evans gave evidence that, had he been made aware that using the LEI would have resulted in no deduction from his damages, he would unquestionably have taken that course.
On the question of consequences, the claimant argued that all of the defendant’s base costs, as well as the success fee and ATE premium, should be disallowed. Two strands of argument were advanced in support of that position. The first relied on the approach in McDaniel & Co (a firm) v Clarke [2014] EWHC 3826 (QB), in which all base costs had been assessed at nil following a failure to advise on union funding. The second was that the claimant should receive the benefit of the £50,000 limit of indemnity under the LEI policy, to be set against the bill he now faced.
The defendant’s position was that the enquiries made in 2019 had been reasonable in the circumstances and that, in any event, the BTE policy would not have covered the claimant’s personal injury claim arising from a road traffic accident. Mr Ratcliffe’s evidence pointed to his experience that family legal expenses insurance attached to home policies did not generally cover motor-related claims, and to the DAS FAQ entry to similar effect. The defendant also argued that, even if cover had been available in principle, the £50,000 limit of indemnity would have been insufficient for a claim of this value and complexity, and that the solicitors would not have recommended the policy given its terms.
On the question of causation, Mr Meehan relied on the Supreme Court’s decision in Perry v Raleys Solicitors [2019] UKSC 5, arguing that the claimant was required to prove that, had he received reasonable advice, he would have acted upon it so as to achieve a more beneficial outcome. Mr Meehan submitted that the various uncertainties as to coverage meant that the claimant could not discharge that burden, and that at most the court should apply a loss of chance approach to reduce any award accordingly.
Were the Enquiries Unreasonable?
The judge began by reviewing the authorities on the proper practice for a solicitor enquiring about BTE cover. In Sarwar v Alam [2001] EWCA Civ 1401, the Court of Appeal had considered the position in the context of a very modest injury claim and held that a solicitor was not obliged to embark on a treasure hunt to seek the insurance policies of every member of the client’s family. Nevertheless, even in that modest situation, proper modern practice dictated that a solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, household insurance policy, or any stand-alone BTE insurance policy belonging to the client and any spouse or partner living in the same household. That practice would enable the solicitor to read through the policy and consider the suitability of the insurance.
Subsequently, in Garrett v Halton Borough Council [2006] EWCA Civ 1017, the Court of Appeal gave guidance that solicitors should generally make enquiries of potential BTE insurers, even where the client was unclear as to whether any such cover was available. This led to the point where a failure to ask suitable questions, even in circumstances where it was later established that there was no LEI available, was found to be inadequate in seeking to establish the availability of any alternative funding.
Against that background, the judge found that the enquiries in this case were lacking in numerous respects. The most obvious deficiency was to fail to make any enquiries at all for more than two years after the accident. Thereafter, the letter from Zurich in response to the enquiry was, in the judge’s view, completely miscategorised as one which simply refused to indicate whether cover was available and which justified a repeat letter being sent. A telephone number in bold print in Zurich’s letter was put forward if any further assistance was required and yet there was no evidence to suggest that any phone call was made to Zurich about the apparent absence of the booklet or to discuss the likely coverage of the LEI in question.
Specialist personal injury solicitors, such as the defendant, are aware, or ought to be, that the company dealing with the LEI is not the same as the company dealing with the home contents insurance, since this was made perfectly plain in Sarwar. The Insurance Companies (Legal Expenses Insurance) Regulations 1990 require the management of claims under legal expense insurer contracts to be carried out by an undertaking having a separate legal personality from the insurer providing the main insurance policy.
Consequently, making desultory enquiries of Zurich, and without getting to the LEI company at all, could not be said to be making any form of reasonable enquiry. The fact that the enquiry was being made two years after the accident could hardly be said to have helped matters. If anything, a more concerted effort to establish the position was required given the delay in doing so. In fact, the correspondence was, in the judge’s view, drafted in a way which sought to encourage a lacklustre response from any potential LEI insurer so that the existing CFA arrangement was not disturbed by any putative BTE cover. The letters sent by Ms Mackulin’s assistant contained numerous bullet points requesting confirmation on various technical points and attached a schedule of charges, together with a statement that if no response was received within 14 days, ATE insurance would be advised. This structure, combined with the failure to telephone despite a prominent number being provided in Zurich’s response, supported the judge’s finding as to the character of the enquiry.
It was noteworthy that when JG Solicitors made enquiries some years later, they appeared to have had little difficulty in establishing the LEI insurer as distinct from Zurich itself.
Was There LEI Available?
The judge acknowledged that there could be no absolute answer to this question, but concluded that, on the balance of probabilities, there was such insurance available. The plain words of the Zurich home solutions policy provided that personal injury claims were covered by the LEI option.
Mr Ratcliffe’s evidence sought to undermine those plain words by giving evidence of his experience of coverage. It may be the case that not all home policies allow for accidents arising out of road traffic accidents to be covered, but the judge considered that Mr Ratcliffe’s evidence of what would have been the case was inevitably, at this distance from the material events, of only modest weight. If the correspondence to Zurich was anything to go by, the seemingly stock letter enquiring about the possibility of BTE cover was designed to produce a negative response. Whether that was actually by design or not, its impact would be to limit the number of occasions on which the defendant would have ever been instructed by a BTE insurer. Consequently, Mr Ratcliffe’s experience of his firm using such cover would inevitably have been more limited than might otherwise be the case.
It was no criticism of Mr Ratcliffe’s evidence that he was unable to obtain confirmation that the FAQ answer applied at the time of the claimant’s accident. But it left some room for doubt and that doubt was fortified by Mr Hazel’s comments. It would have been simple for him to say that family LEI cover could not be used in motor accidents if there was a blanket exclusion in this respect. But he did not make that statement despite being pressed by solicitors on both sides and maintained the more nuanced position that it would depend upon the policy wording in the individual case. That could only mean, as far as the judge was concerned, that some family legal expenses insurance did cover motor accidents, or at least that Mr Hazel suspected that it might have done.
In order to seek some more disinterested evidence, the judge consulted the preliminary report of Lord Justice Jackson regarding his Review of Civil Litigation Costs in May 2009. At paragraph 2.2 of Volume 1, Lord Justice Jackson described BTE as an optional extra on house and contents insurance policies, typically costing in the region of £15 to £20. He stated that the insured may be insured in respect of legal expenses for certain claims which he brings as claimant, including property disputes with the neighbour, claims regarding goods or services received, employment claims or even, depending upon the terms of the policy, personal injury and clinical negligence claims. In many of these cases the BTE insurers pay the claimant’s solicitors on a conventional hourly rate basis, recovering costs from the other side if they win and paying out adverse costs if they lose.
The terms of the Zurich home solutions policy covered personal injury cases in the manner described by Lord Justice Jackson. In any event, the judge preferred the plain words of the policy to Mr Ratcliffe’s evidence in this respect. Jackson LJ’s description of the market simply reinforced that preference.
A separate point made by Mr Meehan was that, even if LEI was available, the solicitors would not have recommended it, given the policy wording. The judge rejected that argument. The points made by Mr Meehan regarding the alleged constraints imposed by the LEI policy held little weight since they were, in the judge’s experience, no more than the sort of wording generally used in such policies. Furthermore, Mr Meehan’s submissions lacked any evidence on which to base the criticisms given that no evidence was given by either Ms Mackulin or Mr Ratcliffe that any such objection to the terms of the policy would have been raised in the event that enquiries had been made sufficiently to establish that it was available.
Would There Have Been No Deduction?
The judge observed that it had been something of an article of faith in the costs world that if a party was able to use BTE insurance, then they would not suffer any reduction in their damages by way of paying for irrecoverable success fees or ATE insurance premiums. Mr Meehan’s skeleton queried whether that was actually the case.
His first argument was that the claimant had failed to establish that the case would have been taken on without any deduction. The judge considered that there was no evidence on this point that helped either side. The fact that the defendant was claiming a success fee and ATE policy in the bill before the court was merely a reflection of the facts that actually occurred. If BTE insurance had been available which covered the claimant’s solicitors’ costs as well as the opponent’s, then there was no obvious need for either a success fee or an ATE policy.
It was not clear why the claimant was said to have the burden of proving a negative. The claimant’s case was simply that the defendant’s activities, or lack of them, had meant that the claimant could not avail himself of insurance he had purchased before the accident. On the face of it, using such insurance would mean a private paying agreement with the solicitor would be backed by an indemnity from the LEI insurer. That arrangement would not require either a success fee or an ATE premium. It seemed to the judge that the defendant ought to be demonstrating that, in such circumstances, they would use a CFA with a success fee and possibly some ATE insurance which the claimant would be required to meet. But there was no such evidence from the defendant any more than there was evidence from the claimant about the supposed inevitability of deductions.
The judge returned to the passage from paragraph 2.2 of the preliminary report of Lord Justice Jackson, which stated that in many of these cases the BTE insurers pay the claimant’s solicitors on a conventional hourly rate basis. A footnote to that passage, numbered 15 and attached to the phrase “on a conventional hourly rate basis”, expressly stated “Without a CFA”. This express description of retainers which do not involve a CFA and therefore do not contain a success fee demonstrated that there was no certainty of any deduction being claimed by a solicitor.
A subsidiary argument of Mr Meehan’s, which potentially had more weight, was that the level of indemnity of £50,000 for the LEI was insufficient and that therefore it could not have been utilised in the first place. Since the LEI is meant to cover both sides’ costs, its limit of indemnity is conceptually burned through at twice the rate, more or less, of an ATE policy which is only responsible for protecting against the opponent’s costs as well as the insured’s disbursements.
The claimant’s claim settled for £250,000 and was obviously a significant personal injury claim. To that extent, the defendant’s argument was well made in that the BTE cover would not have been sufficient to reach trial and that would have been apparent at the outset. There were, however, two difficulties with the defendant’s argument which meant that ultimately it did not prevail.
The first was that the ATE insurance actually taken out, and whose limit of indemnity was £100,000, was also insufficient to take the case to trial. A simple addition of the disbursements in the claimant’s approved budget of £20,280.40 (incurred) and £57,645 (estimated) together with the defendant’s claimed budgeted costs of £73,464, or even just the claimant’s offer in respect of that figure of £66,714, proved that the £100,000 limit of indemnity would have been insufficient to go to trial. That conclusion could have been drawn at the outset of the case if the appropriate approach would be simply to consider the amount of cover required to reach a trial.
Consequently, it was not an answer simply to look at the limit of indemnity of the LEI to decide whether it was an appropriate funding method. Most cases, in fact, settle much earlier, and therefore within the limit of indemnity.
The second difficulty was the existence of so-called top up ATE insurance which had been available for many years, whether or not the original insurance was BTE or ATE. On the basis that top up cover would have been required, whichever policy was originally used should the case have reached a trial, the lower level of indemnity was not a factor which militated against the use of BTE cover if its availability had been established.
Would the Claimant Have Used It?
The defendant argued that, even if there was BTE insurance which the claimant potentially could have used, this was not sufficient for the claimant to obtain a reduction in the defendant’s bill. As Mr Meehan’s skeleton argument put it, the claimant was required to prove that if he had received reasonable advice as to funding, he would have acted upon this, so as to achieve a more beneficial outcome. In other words, it was a basic requirement that the claimant prove loss.
Mr Meehan relied upon dicta approved by the Supreme Court in Perry v Raleys Solicitors [2019] UKSC 5 in support of this proposition. That case dealt with a claim in negligence against the defendant solicitors by the claimant and Mr Meehan particularly relied upon paragraphs 19 and 20 of that decision which fell under the heading “the law about causation in professional negligence cases.”
These paragraphs of the judgment discussed a regular problem of the claimant in establishing what he or she would have done but for the negligent act of their solicitor. It is a counterfactual situation in that the claimant has already had to prove successfully that their solicitor was negligent in order to consider what might have been. It is therefore likely that the situation will be uncertain in terms of proof. Consequently, rather than the court deciding a binary yes or no conclusion on the balance of probabilities, it is often the case that the claimant will receive some but not all of the damages that might flow from the negligence on the basis of a loss of chance.
The thrust of Mr Meehan’s various arguments about whether the policy actually covered the claimant’s personal injury claim, whether it would have been recommended given its terms, and whether, in fact, it would have avoided the claimant having any deduction from his damages were all aimed, to some extent, at reducing the extent of the loss of chance element.
By contrast, Mr Carlisle submitted that all the claimant needed to show was that, on the balance of probabilities, if the claimant had been properly advised he would have taken a different option, that is, he would have used the BTE insurance. In support of this, Mr Carlisle relied upon several paragraphs in the claimant’s witness statement, for example, paragraph 61, in which he said that if he had been made aware that instructing a solicitor associated with his legal expenses policy through Zurich would have resulted in no money, or less money, being deducted from his damages than instructing Fletchers, there was no doubt in his mind that he would have taken that course of action.
The judge acknowledged that it was inevitably the case that any such statement was likely to appear to be self-serving. After all, there was now no prospect of the claimant actually using the BTE policy and so he could safely say that he would have used it in any event. Nevertheless, the judge had no reason to doubt Mr Evans’ evidence and there was no evidence which could be put forward by the defendant to contradict his evidence.
This was not a professional negligence case and it seemed to the judge that the so-called Kitchen discount, from the case of Kitchen v RAF [1958] 1 WLR 563, regarding the use of a loss of chance to reflect the vagaries of a counterfactual situation in professional negligence cases simply did not apply. The attraction of using BTE policies had waxed and waned over the last 25 years depending upon other funding options. But since 2013, and the general elimination of the recoverability of success fees, the use of BTE as a method which would not be expected to require a success fee and ATE insurance to be taken out was something which weighed heavily in the balance. It did not seem to the judge that it took much to persuade the court that if that option were available, then the claimant was likely to avail himself of it. After all, he had paid a fee for that insurance and could be expected to use it unless he was unable to do so.
Consequently, the judge was satisfied on the balance of probabilities that the claimant would have used the BTE insurance policy, whether that was by requiring Fletchers to do so or by instructing another firm who would have been willing to do so.
What Are the Consequences?
Having decided on the balance of probabilities that there was BTE insurance available which the claimant would have used, the judge turned to the question of what effect that had on the costs payable by the claimant to the defendant.
The claimant contended that all of the defendant’s base costs as well as the success fee and the ATE premium should be disallowed. There were two strands to the claimant’s argument regarding the reduction in the base costs. The first was that the judge should follow the approach of Hickinbottom J, when upholding Senior Costs Judge Gordon-Saker’s disallowance of all base costs in the case of McDaniel & Co (a firm) v Clarke [2014] EWHC 3826 (QB). The second strand was that the claimant ought to receive some benefit from the £50,000 limit of indemnity in the LEI by having that sum deducted from the bill which he now faced.
In McDaniel, the solicitors accepted that they had not advised the claimant properly as to alternative methods of funding. In particular, Ms Clarke was a member of a trade union and there was evidence to confirm that the trade union would have backed her claim. On that basis, the judge decided that none of the costs claimed against Ms Clarke were reasonably incurred and so assessed the bill at nil.
The judge did not accept that there was any direct comparison between this case and McDaniel. If the claimant had been able to use the BTE insurance, then he would still have been liable for the solicitors’ base costs: the LEI simply providing an indemnity. That was a very different situation from where a trade union backs its member and the member has, in effect, no direct responsibility. The judge saw no scope for the argument that the base costs were not recoverable in principle by the solicitor based on McDaniel.
Nor did the judge think there was any weight to the second argument regarding the use of the LEI’s limit of indemnity. The claimant had been successful in his case and therefore would expect to recover costs from his opponent. All of the costs reasonably incurred would be recoverable. Only those costs which were unreasonable either in the manner in which they were incurred or in their amount would not be recoverable from the opponent. Such unreasonable costs would also not be recoverable under the LEI policy. There might arguably be a reasonably incurred disbursement which was not recoverable, but there was certainly nothing to suggest that the entire limit of indemnity ought to be set against the costs incurred by the claimant in the manner contended for by Mr Carlisle.
Nevertheless, based on the reasoning throughout the judgment, it was clearly the judge’s view that the success fee would not have been incurred if the BTE policy had been utilised. On that basis, the judge disallowed the success fee in its entirety. The same reasoning would apply to the ATE policy, though the judge noted that this item did not strictly fall for assessment within these proceedings and accordingly made no formal ruling on it.
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