Success fee claim in Inheritance Act case fails

Following a hearing on 18^th January 2024, the Supreme Court has finally decided that a claimant in an Inheritance Act claim cannot have included in their actual award a sum in respect of the success fee which they are liable to pay their solicitors under a conditional fee agreement (‘CFA’) otherwise known as a ‘no-win no-fee’ agreement.

The daughter of the deceased, who had severe health problems and insufficient income or assets to support herself, issued a claim under the Inheritance Act for reasonable financial provision. The defendants were her mother (who also had severe health problems and who defended the claim) and her brother who remained neutral.

In the light of the claimant’s financial position, her solicitors entered into a CFA on the basis that if the claim succeeded, they would, in addition to their basic costs, be entitled to a success fee calculated at 72% of those.

The High Court decided that the deceased’s will, leaving everything to his wife, did not make reasonable financial provision for the claimant. Included within the judge’s award of £138,918 was £16,750 being part of the overall success fee of £48,175.

Although when CFAs were originally introduced it was possible for a successful claimant to recover from their opponent not only the basic costs but also the success fee, the law changed in 2013 to prohibit the recovery of success fees in civil proceedings. In essence therefore, the claimant was seeking to recover by the back door that which they could not recover through the front door.

This is obviously a disappointing outcome for claimants of limited means. It was historically thought that the introduction of CFAs gave greater access to justice following the withdrawal of legal aid in civil cases. On the other hand, respondents to Inheritance Act claims funded by CFAs where claimants are not paying their costs as they go along can often feel as though they are being held to ransom.

Having done a number of CFAs for claimants over the years, I am in principle in favour of them. Unfortunately, with the involvement of claims management companies in personal injury cases, the system was subject to abuse and it was decided that the law needed changing.

Previously, a successful claimant could recover both the success fee and the after the event insurance premium from the unsuccessful defendant. On the basis of Grimwood’s ‘First Law of Pendulums’ where something is wrongly too far in one direction and is corrected it often swings back too far the other way.

Perhaps the sensible solution would be that whilst the success fee should be deducted from the claimant’s award, the after the event insurance policy premium should be recoverable from the defendant. On this basis, an unsuccessful claimant would not be personally penalised by an adverse order for costs and the successful defendant in such a case would be able to recover their costs albeit via the claimant’s insurance.

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