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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Herbert v HH Law Ltd  EWHC 580 (QB) (21 March 2018)
Cite as:  2 Costs LR 261,  EWHC 580 (QB)
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QUEEN'S BENCH DIVISION
SHEFFIELD DISTRICT REGISTRY
50 West Bar
Sheffield S3 8PH
B e f o r e :
| MS NICKY HERBERT
|- and -
|HH LAW LIMITED
Mr Ian Simpson (instructed by JG Solicitors Limited) for the Claimant/Respondent
Hearing dates: 8 November, 15 December 2017
Crown Copyright ©
Mr Justice Soole :
(i) on assessment of HH's bill of costs in respect of the Claimant (Ms Herbert)'s personal injury claim reduced the success fee under the conditional fee agreement (CFA) from 100% to 15%;
(ii) approved a Cash Account in terms which treated payment of Ms Herbert's ATE insurance premium as a solicitor's disbursement;
(iii) in ordering HH to pay the costs of the assessment, refused to inquire further into HH's contention that the retainer of Ms Herbert's new solicitors JG Solicitors Ltd (JG) was tainted by illegality and unenforceable.
'If you do not have suitable alternative funding as detailed above then we will take out an insurance policy with Centron Insurance…
…The insurance policy costs £349 and will be deducted from your damages at the conclusion of the claim as well as up to 25% of your damages. If you do not inform us otherwise, a policy will be taken out if you do not have suitable alternative legal funding to protect you against having to pay the other side's costs…
…We only deal with Centron Insurance for Legal Insurance Policies but we are not contractually obliged to conduct business in this way. You are free not to take out an insurance policy with Centron or choose your own insurance policy however we must advise that not having an insurance policy in place will expose you to the risk that you may have to pay costs and disbursements from your own pocket.
You are taking this insurance policy out without the firm having conducted a fair analysis of the market. We have researched legal protection insurance policies generally and found Centron policies to be reasonably priced given their high level of protection. You also do not have to pay for the policy unless your claim is successful, which we believe is a benefit for our clients. Please note that the firm does not have an interest in recommending this policy and the firm will not receive a commission from the Insurer…
…We believe that a contract of insurance with Centron Insurance is appropriate because..', then citing a list of factors including 'The premium reflects the category of risk'.
Assessment of success fee
(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed
(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;
(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;
(c) to have been unreasonably incurred if
(i) they are of an unusual nature or amount; and
(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.
(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied'.
'6. As a firm, we considered that the easiest and most transparent way was to make a solicitor own client charge, by way of a success fee which the client could pay out of damages. The success fee would be based on the basic costs that we actually recovered from the other side, thus limiting the fee.
7. We considered that clients would readily understand that method in principle, and we also thought it was fair, as the client's interests would be protected by the statutory cap on deductions from certain categories of damages of 25%. An individual client would therefore always retain 75% (at least) of his/her damages.
8. Conversely, charging the client an increased hourly rate, or requiring the client to pay hourly rates when only fixed costs were going to be recovered in many cases, seemed to us to be more cumbersome, result in the hardest fought and most difficult cases carrying the heaviest burden of irrecoverable costs and less fair.
9. I can say that the model we have adopted, is that opted for by most of our competitors. It is routine that solicitors now make a solicitor client charge in the form of a success fee: I also know that many of our competitors charge success fees in the same way that we do. Our policy on success fees and the amount therefore reflects the 'market rate' for a person who wishes to instruct a solicitor will pay. Equally of course, clients are free to 'shop around' for a better rate, or lower success fee.
10. The success fee in this case is a contractually agreed fee, with the quantified fee of 100% (with the 25% maximum limit capping her liability) specifically agreed between the Claimant and this firm. I have no doubt that the Claimant was fully aware of the charging structure and it was expressly set out in her Conditional Fee Agreement and funding documentation. The Claimant as client was free to ask questions if there was anything she did not understand. In this case, neither at the outset of the case when funding was discussed, or at any point to its conclusion did the Claimant raise a concern, or seek to suggest that the fee was unfair.'
Appeal on success fee
'54.6 Where the client applies to the court to reduce the percentage increase which the solicitor has charged the client under the conditional fee agreement, the client must set out in his application notice : (a) the reasons why the percentage increase should be reduced; and (b) what the percentage increase should be.
54.7 The factors relevant to assessing the percentage increase include (a) the risk that the circumstances in which the fees or expenses would be payable might not occur; (b) the disadvantages relating to the absence of payment on account; (c) whether there is a conditional fee agreement between the solicitor and counsel; (d) the solicitor's liability for any disbursements.
54.8 When the court is considering the factors to be taken into account, it will have regard to the circumstances as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into.'
Appeal on ATE premium
'29.3 If separate designated client accounts are used: (a) a combined cash account must be kept in order to show the total amount held in separate designated client accounts;…
29.4 All dealings with office money relating to any client matter, or to any trust matter, must be appropriately recorded in an office cash account and on the office side of the appropriate client ledger account'.
Costs : illegality
Note 1 The £829.21 was calculated as 25% of the general damages (£3316.84) forming part of the total £3400. [Back] Note 2 Also described as ‘actual disbursements’ [Back] Note 3 See The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No.2) Regulations 2013; and the County Court decision in Martin v. Queen Victoria Hospital NHS Foundation Trust, 13.5.16. [Back] Note 4 Handed down 19.1.18, after the hearing in this case [Back]
Note 1 The £829.21 was calculated as 25% of the general damages (£3316.84) forming part of the total £3400. [Back]
Note 2 Also described as ‘actual disbursements’ [Back]
Note 3 See The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings (No.2) Regulations 2013; and the County Court decision in Martin v. Queen Victoria Hospital NHS Foundation Trust, 13.5.16. [Back]
Note 4 Handed down 19.1.18, after the hearing in this case [Back]