A recent High Court case has opened the door to Claimants in Inheritance Act claims recovering the additional ‘success fees’, where these were previously non-recoverable in most litigation since 2013.
Those wishing to contest the probate of an estate, or to claim financial provision under the Inheritance Act 1975 (the 1975 Act), may do so under a Conditional Fee Agreement (CFA), or more commonly known as a "no win, no fee" with their legal representatives. If the Claimant wins money in the case, by settlement or trial, the solicitor receives a success fee The success fee is a percentage uplift to the standard costs of the solicitor in the event of a ‘win’, and are designed to offset the risk to the solicitor of not being paid at all, and for the delay in being paid even when successful.
Historically, success fees would be added to the costs recoverable against the losing party, but that all changed as of 1st April 2013 when legislation (Legal Aid Sentencing and Punishment of Offenders Act 2012) was introduced, making success fees non-recoverable. From that date, for the vast majority of civil litigation claims under a CFA, even though a party was successful they may be able to recover their base costs from their opponents, but would be left having to deal with the success fee out of the money awarded by the Court. This might in some cases be as much as £10,000 or £20,000 or higher depending on the complexity of the case. Whilst unsatisfactory to Claimants, that is often the cost of being able to take the case forward where there might not otherwise be such an avenue.
Is the Law Changing?
The law may be changing under case decisions made recently.
Firstly, His Honour Judge Gosnell in the Leeds County Court (Bullock -v- Denton and Anor, unreported, 15th April 2020) recognised an uplift as being a financial need of the Claimant. Of a figure of £24,000 plus VAT and the Judge allowed a total figure of £25,000 as a contribution to the CFA. The Judge held that he was entitled to take this liability into account because they fell within the Claimant's financial needs under Section 3(1)(a) of the Act, and were debts incurred since the death. An assessment of needs under the 1975 Act was as at date of trial, not at date of death. The Judge said that they needed to look at the reality of the situation and, as had been put by Mr Justice Briggs previously, "in the real world".
Whilst only a County Court decision and not binding on other Judges, there is a further case - Re H (Deceased) (2020) EWHC1134 (Fam) - in which the approach in Bullock -v- Denton and Anor was adopted. It was held to be open to the Judge to award a sum in respect of the success fee as part of the Claimant's reasonable needs, in particular
“it is appropriate for me to consider this liability as part of C's needs. I do so largely for case specific reasons. I am not making a large award (unlike in Re Clarke). It is not an award that permits of much elasticity. If I do not make such an allowance one or more of C's primary needs will not be met. The liability cannot be recovered as part of any costs award with the other parties. The liability is of that of C alone. She had no other means of funding the litigation."
The Judge went on to award a sum equivalent to a success fee of 25% which he assessed as being reasonable in the circumstances.
This bodes well for prospective Claimants under 1975 Act claims and may make it even more attractive for them, and their solicitors, to fund the case in this way. It is yet to be seen whether Re H (Deceased) will be appealed in that regard.
This article was written by Toby Walker, Dispute Resolution Partner at Allan Janes LLP. Toby and his Team have specialist expertise in the area of contested probate, trusts and proprietary estoppel claims. Please do not hesitate to contact us for a free no obligation telephone discussion.