Simon Browne KC of 12KBW has written an article for AvMA’s (Action against Medical Accidents) November Newsletter.
Introduction
Over the last few years Claimant solicitors undertaking work for clients through both conditional fee arrangements and other retainers have become increasingly aware of the need for the Claimant (or Claimant’s representative) to have informed consent as to the fee arrangements involved.
Even if the client care aspect is thoroughly fulfilled there remain a number of potential pitfalls which may affect recovery of costs, and particular additional liabilities out of the recovered damages.
This is particularly so in high value catastrophic cases where the claimant is (a) a child and or (b) a protected party and the recovery of success fees and ATE premiums from the recovered damages has to be approved by the Court.
If a Solicitor has agreed with the client to take a “success fee” and/or ATE premiums (typically up to 25%) from any damage’s agreement, the Court needs to approve this deduction from the final damage’s settlement otherwise the deduction is unlawful.
Judicial Guidance and Approach
Such approval of costs recoveries as stated above can be a complicated process. It is usefully explained by the Practice Note of the then Senior Costs Judge, Master Andrew Gordon Saker, in December 2021. A copy of this Practice Note follows this article. It has attached useful Appendices of Draft Orders.
Nevertheless, there remains trepidation on the part of many solicitors applying for approval of deduction of additional liabilities from damages that, even in cases where the client’s litigation friend agrees to the deductions, the Court may side with the client and try and restrict deductions from damages. One solicitor has stated “it is like having your homework marked and if there are mistakes you lose out.”
Certainly, it is a process which is undertaken to protect the best financial interests of the recipient of the damages. Nevertheless, speaking to Costs Judges in the Senor Court Costs Office (“SCCO”), it is far from the truth so say they are obstructive or even unsympathetic.
The starting point is that they understand that solicitors representing Claimants are entitled to, and deserve, recompense for taking risks; this is particularly so in difficult and complicated catastrophic injury case for children and/or protected parties. The Judges are also aware that there are many cases they do not see which fail and the solicitor recovers no fees.
Nevertheless, they are also there to ensure that the client is not paying more out his or her damages than is reasonable. The largest proportion of cases where the solicitor fails to recover the sums claimed are those where the Practice Note and Directions from the Court are not followed. Adherence is required to produce the relevant documents, explain the levels of risk, the advice given which results in the success fee sought from the damages.
The whole purpose of the guidance and directions from the Court is to furnish the Costs Judge with material upon which an assessment can be made. Indeed, it is not uncommon that the Costs Judge may deal with the matter on the papers if they are all in order and the relevant information on which to make a decision is provided.
Directions of the Court
As to procedure, even if the Practice Note is of use, there will be a Directions Order upon lodging the papers containing disclosure paragraphs similar to those set out and discussed below. Whereas these may be directions often used in the SCCO, they provide a good working guide as to what should be provided to any Judge considering such applications.
The Costs Judges will not necessarily deny an application if the material falls short of what is required, but may adjourn the case off to another date, which with listing may be months. This affects cash flow and can be expensive to prepare yet again for another hearing.
(1) The Claimant’s solicitors shall at least 7 days before the hearing file in either paper or electronic form (i) a note / skeleton argument as to the reasonableness of the Success Fee sought and (ii) the following documentation (to the extent that it has not already been provided)
As to the Skeleton Argument I suggest this should be comprehensive and cover:
- What is being applied for and under which CPR rules and statutory provisions (e.g. CPR 21.12 and the court will undoubtedly have regard to CPR 46.9 and the case law).
- What evidence is being provided in support (e.g. witness statement from the solicitor and possibly from the costs lawyer who negotiated costs recovery).
- Summary of the relevant provisions in the CFA and the discussions with the “client” surrounding the same.
- Whether the solicitor is pursuing both success fee and ATE premium and relevant factors such as whether the solicitor is seeking also to recover shortfall in costs recovery.
- Whether the solicitor has funded expert reports and their attendance (these factors will affect the success fee as to the risks taken).
- Reasonableness of the additional liabilities claimed.
- The calculation of the success fee with regard to recovered costs, percentage uplifts, and level of the 25% cap.
(a) Pleadings and relevant documents in relation to the substantive proceedings, including Letter of Claim, Letter of Response and Counsel’s advice on approval of damages together with relevant quantum assessment.
These should be provided in full. Counsel’s advice on approval of damages is critical regarding the 25% cap. Counsel’s advice should state the suggested or approved level of the settlement sum for each head of claim and not simply what the pleaded case was (e.g. there may have been a pleaded case for past care at £175,000 but counsel advised settling that head of claim for £115,000). It is the latter figures which is relevant.
(b) Conditional Fee Agreement/s and the risk assessments/s
These are critical. Risk assessments may be elsewhere so those documents should also be attached. Please note that risk assessments may also be handwritten in attendance notes so ensure the critical documents are typed up for ease of reference.
c) All attendance notes or other documents relevant to the issue of the risk undertaken by the solicitors at the time the CFA was entered into, to include all documents on file setting out the facts and matters known to the solicitors at the time they entered into the CFA.
The points about handwritten records being typed is again essential. The information therein and also given to the client by way of information, is crucial and should form the basis of reasoning to arrive at the level of the success fee. ALL relevant documents should be provided. If there was, for example, an NHS Trust initial report into the incident which was considered in the setting of the success fee this should be attached.
If there was further consideration of the risks and success fee following the issue of breach of duty / causation being resolved, evidence as to this should be disclosed. If the solicitor started with a 100% success fee and succeeded on liability and causation and proceeded to assessment of damages certain Costs Judges will be considering an overall success fee in the region of 35%-40%.
The important matter for assessment is what the solicitor was the thinking at the time and whether that was reasonable. By way of further example, it may be that case that a Legal Aid solicitor had previously had the file, expressed views as to success and was denied further funding. Such factors are extremely relevant if, for example, the new solicitor then took the case over on a CFA where prospects were fairly low, succeeded and claimed a high success fee (albeit capped).
(d) Papers relevant to Inter-Partes Costs settlement (Including the Bill of Costs or any breakdown of costs which formed the basis of negotiations between the parties).
This can often be covered by the costs lawyers who conducted negotiations in a witness statement with exhibits. All relevant information should be disclosed.
Other Judicial Guidance
Finally, note should be had of the appeal judgment of the judgment of HHJ Simon Monty KC in the Central London County Court in the case of Duffield (a minor, by his mother and Litigation Friend Ms Sandra Matuleviciute) v. – and – W M Morrison Supermarkets Ltd. in the Central London County Court (Neutral Citation Number: [2025] EWCC 35) handed down on 1st July 2025.
He had been informed that there was inconsistency amongst the judgments of the District Judges on such applications and the DJs were falling into error. HHJ Monty KC was concerned and therefore provided a reasoned written judgment which might assist those who have to deal with similar issues in other cases. He acknowledged that whilst each case will, of course, turn on its own facts, the matters of principle with which he was concerned on this appeal are of general application.
Experience shows that some Costs Judges in the SCCO have noted his judgment but were not particularly assisted by it as they were aware of the correct legal principles.
The author Simon Browne KC, of 12 Kings Bench Walk, is notably ranked in the directories in Band 1 of two separate practice areas, namely “Costs and Litigation Funding” and “Catastrophic Injury”.
