The defendant costs specialists

"Grotesque" funding arrangement

By on Dec 17, 2010 | 7 comments

Lord Justice Jackson, giving the leading judgment in the case of Pankhurst v White [2010] EWCA Civ 1445, described the claimant’s solicitors’ funding arrangement as “grotesque”.

What generated this fury, aside from the fact that there was a success fee claimed and the claimant had the benefit of ATE obviously?

The claimant’s solicitors had entered into a conditional fee agreement (CFA) some two months after obtaining judgment on liability with a 100% success fee if the action went to trial. “Success” was defined as any recovery of damages. The claim related to a catastrophic injury case where there could be no question of damages being assessed at zero once primary liability was resolved. Therefore, even if the claimant lost at a quantum trial on a defendant’s Part 36 offer, as indeed he did, the solicitors would still be entitled to their base costs in relation to the quantum trial. This would come out of the claimant’s damages.

As Jackson LJ observed:

“In the circumstances of this case there was no risk whatsoever that the claimant’s solicitors would not be paid their base costs in full. Yet the solicitors were charging a ‘success fee’ on top of their base costs for running a non-existent risk. This makes a mockery of what is said to be the justification of the present conditional fee agreement regime.”

This case represents a perfect example of how to kill a golden goose. This is why claimant lawyers’ pleas that the Jackson proposals will hinder access to justice are likely to fall on deaf ears.

This case has an interesting twist. It appears that the MIB, who were defending the claim, agreed “with the benefit of legal advice” to pay a 35% success fee to the claimant. What strange legal advice the MIB appear to have received.

    7 Comments

  1. What advice was anyone getting. To run this appeal on any other day seems madness. To run this appeal now in the present climate re CFAs etc seems to commercial suicide to me. Seriously, did they even think they had anything to gain?

    chris a

    17th December 2010

  2. The whole thing is quite unbelievable. Except for the stupidity of the MIB. That’s a given, obviously.

    Jacques Hughes

    18th December 2010

  3. PS – the obvious course is for the client to apply for his solicitor’s costs to be taxed. The success fee would certainly be disallowed, and the sum paid by the MIB in that respect would be the client’s to keep. This at least would give him some compensation for the solicitors charging him the costs unrecovered by them when he failed to beat a part 36 offer. Quite how his QC felt able to tell the Court of Appeal that charging clients in these circumstances was standard PI practice is beyond me.

    Jacques Hughes

    20th December 2010

  4. As Jackson LJ observed:

    “In the circumstances of this case there was no risk whatsoever that the claimant’s solicitors would not be paid their base costs in full. Yet the solicitors were charging a ‘success fee’ on top of their base costs for running a non-existent risk. This makes a mockery of what is said to be the justification of the present conditional fee agreement regime.”

    – read again the above. With comments like this from Jackson it just shows how dangerous his proposals really are.

    Cost Muppet

    20th December 2010

  5. One point that seems to have been overlooked (or I may just be being stupid) is that Pankhurst -v- Lee was an RTA and thus subject to fixed success fees anyway.

    Anonymous

    11th January 2011

  6. Date of accident pre-dated fixed success fee regime.

    Simon Gibbs

    11th January 2011

Trackbacks/Pingbacks

  1. Unlawful and grotesque funding arrangement? | - [...] Jackson LJ's attack on "grotesque" funding arrangements (see link) raises an issue I have been meaning to comment on…
  2. CFAs for beginners | - [...] in the wake of Lord Justice Jackson’s comments in Pankhurst v White [2010] EWCA Civ 1445 concerning “grotesque” funding…

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