Court of Appeal rules that an award can include a sum to cover solicitor success fees under a Conditional Fee Agreement

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In the landmark case of Hirachand v Hirachand & Anor [2021] EWCA Civ 1498, the Court of Appeal has held that an award under the Inheritance (Provision for Family and Dependants) Act 1975 may include a sum to enable the Applicant to pay all or part of their solicitor’s success fee under a Conditional Fee Agreement (a CFA, sometimes called a ‘no win, no fee’ agreement).

If a party is successful under a CFA, they will not only have to pay their solicitor’s basic costs but also a success fee of up to 100% on some or all of those costs.  If the party is unsuccessful, they will not have to pay some or all of their solicitor’s costs.  What the percentage is and what part of the costs will attract a success fee depends on the agreement reached between the party and their solicitor.

The case came to Court in May 2020. At the initial hearing, the Applicant was granted a sum to cover the success fee, on top of her maintenance award.

Background

The applicant was the estranged daughter of the deceased and had brought a claim against his estate under the Inheritance (Provision for Family and Dependants Act 1975 (‘the Act’). The basis of her claim was that the deceased’s Will had failed to make provision for her and so wanted an award of maintenance.

In the first instance, the applicant was awarded £138,918 which included a sum of £16,750 to meet part of her success fee in relation to a CFA she had entered into with her solicitors. The Judge stated that it was appropriate to consider this liability as part of the Applicant’s needs and noted that the CFA and an award for the success fee was necessary as the Applicant would have had no other means to fund the claim.

Appeal

The basis of the Respondent’s appeal was on the grounds that the Judge did not have the authority to grant an award for the solicitor’s success fee in accordance with the CFA as the legal reforms governing CFAs which came into force in 2013 forbid the recovery of success fees from a defendant where a claimant is successful. On that basis, it was argued that the sum awarded in relation to the success fee should remain within the estate.

However, the appeal was dismissed on the grounds that the success fee formed part of the debts for payment of the Applicant and therefore should be considered when assessing her financial needs under the Act. The appeal Judge went on to say that a success fee is capable of being a debt and the Applicant would need to have provisions made to be able pay that debt.

Currently, in these sort of cases, there is no need for one party to disclose the existence or content of a CFA to their opponent but the Court of Appeal’s decision has given rise to several questions:

  • What part of the CFA does the one party need to disclose to the other, if any?
  • What percentage uplift does it include?
  • How soon, if at all, does the one party need to disclose to their opponent that there is a CFA in place?
  • What will be the consequence, if any, for failure to inform that a CFA exists?

It will be interesting to see how these are answered in any future cases involving similar circumstances. For more information, please contact a member of our team.