"Grotesque" funding arrangement
Lord Justice Jackson, giving the leading judgment in the case of Pankhurst v White  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.