Automatic 100% success fees banned
For many years, a large number of personal injury solicitors have automatically charged their clients a 100% success fee regardless of the risks of the case. This has been a standard business model for many firms, with the reasoning being that this will usually lead to an automatic 25% cut of the client’s general and existing financial damages (as a result of the cap on the level of success fee in personal injury claims) in addition to any costs recovered from the other side.
The Court of Appeal has now held, in the case of Herbert v H H Law Ltd  EWCA Civ 527, that this will normally be inappropriate and that any success fee should reflect the actual risks in the case (here held to be 15% for a straightforward RTA) unless the client has given “informed consent”.
In terms of CFAs already entered into, this decision is likely to open the floodgates to solicitor/own client challenges.
Going forwards, it is likely to be an uphill struggle, when entering into new CFAs, to show that the average lay client has given informed consent to a success fee that does not fairly reflect the risks of the case.
For a detailed summary of this decision, see Robin Dunne’s, junior counsel for the respondents in the appeal, article. This also deals with the important issue of whether an ATE premium is a disbursement that needs to be included within a statute bill.