Supreme Court - A Win for Charities in CFA Success Fee Ruling

The Supreme Court has just delivered an early Christmas present for charities by overturning the Court of Appeal's decision in Hirachand v Hirachand.  The decision concerned the recoverability of the success fees payable by claimants with a Conditional Fee Agreement (CFA, otherwise known as no win: no fee). 

Where a claimant has a CFA then, if they succeed with their claim as defined in the agreement, they have to pay a success fee in addition to their usual solicitors' costs (known as base costs).  The success fee can be up to 100% of the base costs.  Those of you with long memories will remember that claimants used to be able to recover success fees from defendants if they succeeded with their claims, meaning that defendants could be faced with huge costs liabilities.  This in turn resulted in more generous settlements than would otherwise be merited, to avoid the risk of such large bills.  

In 2013, the rules changed so that litigants were no longer able to recover success fees from the other party.  All was calm until the case of Hirachand, where the court held that, in claims under the Inheritance (Provision for Family and Dependants) Act 1975, a claimant with a CFA would potentially be able to recover all or part of their success fee as part of the award under the Act.  That decision was upheld by the Court of Appeal.  Since then, charities have again faced the threat of inflated awards, putting them at a disadvantage when negotiating settlements of 1975 Act claims.

Fortunately, the Supreme Court has seen sense and overturned the Court of Appeal's decision, meaning that claimant's success fees will once again no longer be recoverable from defendants.  This decision provides much needed clarity for charities and should lead to less generous settlements for claimants with CFAs.