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Following the implementation of LASPO the majority of success fees and ATE premiums are no longer recoverable on an inter partes basis. Instead, such items are now recoverable from the client directly. There has been a number of circumstances where the client has sought to challenge the level of the success fee or ATE premium and this has resulted in the CFA and other client care documentation coming under significant scrutiny by the Courts.
Unfortunately, this comes right at the end of the claim and it is likely to be too late to make any amendments or corrections to ensure that a success fee or an ATE premium is able to be deducted from a client’s damages.
Evans v Fletchers Solicitors Ltd [2026] EWHC 1523 (SCCO) provides another example of where a potential failure at the beginning of the claim can result in a significant loss in the amount of costs which are recovered. In this matter the Claimant instructed the Defendant to pursue a personal injury claim following an RTA. The claim was successful and a settlement sum of £250,000 was agreed between the parties. The inter partes costs were subsequently agreed and, as such, the Defendant proceeded to raise an invoice in the sum of £61,615.13 inclusive of a success fee of £30,365.13 which was capped at 25% of the relevant damages.
The Claimant brought proceedings pursuant to the Solicitors Act seeking assessment of this invoice. A number of challenges were raised to the items contained within the invoice and one of the key challenges raised was whether the claim should have been funded by way of a CFA in the first place.
At the outset of the claim initial enquiries were made in respect of the availability of Legal Expenses Insurance or BTE Insurance. These enquiries took place in 2017 immediately after the accident with very little information coming to light. In 2019, when proceedings were required to be issued, further investigations were undertaken and correspondence was sent to the home insurance policy company directly. The response directed the Defendant to the policy documents but did neither confirm nor deny the potential availability of LEI for the claim.
Senior Costs Judge Rowley proceeded on a methodical basis asking a number of questions to arrive at a suitable conclusion. The first question was whether the Defendant’s approach to enquiries for alternative funding unreasonable? Considering the facts and the limited enquiries made the answer was yes, the lack of enquiries was unreasonable. Reference was made to the Defendant Firm only raising enquiries with Zurich, the main policy provider, and not with DAS, the LEI provider.
The next question was whether there was LEI available to the Claimant to use to fund his claim? SCJ Rowley confirmed that there could be no definitive answer to this question due to the time which had passed. However, he was able to find on the information presented to the Court that, on the balance of probabilities, there would have been LEI available to the Claimant.
The next question posed was whether the use of the LEI would have resulted in no deductions being made? SCJ Rowley considered the generally accepted approach that the availability of BTE, and the security it provides by covering both parties’ costs in the event the claim is unsuccessful, would nullify the need for a success fee because the Claimant’s solicitors would be paid in either event. Furthermore, the lack of indemnity provided by the LEI was not sufficient to displace the answer with SCJ Rowley referring to the availability of top-up ATE cover.
The final question considered was whether the Claimant would have used the LEI if it was available? Given the findings above, and that by relying on the LEI the Claimant would have avoided any deductions from damages being made, SCJ Rowley found on the balance of probabilities that the Claimant would have used the LEI available.
The Claimant’s representative attempted to argue that such findings would result in the disallowance of all of the Defendant’s base costs in accordance with the decision in McDaniel & Co (a firm) v Clarke [2014] EWHC 3826 (QB). SCJ Rowley was able to distinguish the present case from the decision in McDaniel on the facts and that the BTE cover available to the Claimant in present case would have resulted in the Defendant still being able to recover their base costs from the BTE provider if the claim was unsuccessful.
SCJ Rowley concluded that ‘the success fee would not have been incurred if the BTE policy had been utilised. On that basis, I disallow the success fee in its entirety’.
It is therefore clear that great care needs to be taken at the commencement of a claim to conduct proper BTE insurance checks and to explore alternative funding options. Failure to do so, or a failure to check you CFA sets out the terms you intend may result in all or part of the success fee being disallowed.
You can contact the author of this article, Kris Kilsby here.
