Success fee: Clients need greater explanation
The law firm at the centre of the Court of Appeal decision on blanket 100% success fees has expressed its concern that the decision could “open the floodgates” to solicitor/own-client assessments.
Appeal judges ruled that HH Law in Liverpool should have conducted individual risk assessments on low-value personal injury cases to set the success fee, or explained to the client that the fee was not linked to risk.
The case was brought on behalf of HH Law’s former client, Nicky Herbert, by JG Solicitors in Liverpool, which specialises in recovering “unfair” deductions by solicitors from clients’ damages.
Speaking for HH, costs draftsman Phil Thompson said the court’s guidance was needed, “given the huge changes in the CPR in respect of funding and costs over the past few years”, and that it was happy with the ruling overall.
But he continued: “There is concern that this case will open the floodgates to solicitor/own-client assessments. There has been a raft of solicitor/own-client assessment claims which has in the main been solicitor-led litigation – no doubt due to the ability to recover indemnity costs for what is often very small sums sought.
“This is a worrying trend as in many cases and, in the case of Mrs Herbert, she never actually complained to the firm directly.”
Mr Thompson said that, whilst the court found that it was necessary for solicitors to provide a greater degree of explanation to the client, to make sure that they understood that the success fee was not being calculated on the risk of their individual case, “we are satisfied that lessons have already been learnt from this finding”.
He explained: “We have continually updated our retainer documents and client billing processes to provide further clarity and certainty to clients.”
Mr Thompson said HH Law funded the appeal “for the wider good of the profession in order to bring greater clarity to the law”.
He was also pleased that the judges found the firm’s funding documentation to be clear and not in breach of any of the relevant legislation.
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