The recent cases of Bullock v Denton & Willougby (unreported) and Re H (Deceased)  EWHC 1134 have sparked the interest of many contentious probate lawyers, particularly those offering to represent their clients on a conditional fee arrangement (CFA) funding basis. A CFA generally means that the claimant does not pay for any fees upfront, only being liable to pay their legal fees at the end if the claimant ‘wins’. If a claimant loses a case, or does not ‘win’ within the defined terms of a win, then they usually pay nothing. Due to the risk of losing and to take bank-rolling a claimant into account, most CFAs are offered with an ‘uplift’ or ‘success fee’, which, if a claimant is successful, is recovered in addition to the recorded legal fees.
Whilst it is common knowledge that at trial the ‘winner’ can generally seek to recover their costs from the ‘loser’, or at least a large proportion of these costs, it has long been established over the years, that this does not include the recovery of any uplift or success fee.
In the two cases above, however, the claimant was able to recover the success fee by claiming that this was a future liability and, therefore, that it had to be taken into consideration under Section 3 of the Inheritance (Provision for Family and Dependants) Act 1975 (the “1975 Act”).
In brief, in Bullock v Denton & Willoughby, the Deceased died in 2018 with an estate worth around £2,000,000. He left behind a will, leaving the entirety of his estate to his brother, Chris. The claim was brought by Yvonne, the Deceased’s partner of just less than 4 years, who had been left with no provision under the Deceased’s will. Yvonne had no assets of her own, debts of around £23,000 (most of which were incurred by her and the Deceased) and her income failed to meet her outgoings.
The Judge ruled in favour of Yvonne, awarding her £140,000 on trust to secure her accommodation need, and £70,000 in cash to cover her debts and future debts, including £25,000 on account of her success fee. The Judge stated:
‘I know that she is going to succeed in her claim… this will trigger her obligation to pay additional liabilities to her lawyers. She will not recover them from the Defendant as part of her costs, so they are a debt she has incurred since the death of the deceased and are part of her future financial needs.’
In Re H, the claim was brought by an adult child of the Deceased. The estate was worth around £554,000 and on awarding a sum of money to the claimant, the Judge took into account her success fee. The Jude confirmed:
‘I accept that it is appropriate for me to consider this liability as part of C’s needs. I do so largely for case specific reasons. I am not making a large award… If I do not make such an allowance one or more or C’s primary needs will not be met. The liability cannot be recovered as part of any costs award from the other parties. The liability is that of C alone. She had no other means of funding the litigation.’
Does this change everything for claimants using CFAs?
Whilst the above is interesting and represents a clear departure from the established law, it is worth noting that these were County Court and High Court cases which could be subject to appeal, and so the judgments must be considered with caution. Further, these two cases involved claims solely under the 1975 Act, where the court has a wide discretion as to what it can take into account and award. Despite this, there are now clear grounds to argue for the recovery of a success fee as part of a claimant’s future liabilities, and this could be just as influential in pre-trial negotiations and mediation, as it might be going into a Trial.
Does this affect our charging structures?
We always seek to ensure that our clients keep their legal costs to a minimum and that they are reasonably incurred at all stages. We offer a range of funding arrangements. Irrespective of the two judgements above, the foremost considerations when offering clients either a deferred invoicing arrangement or a full CFA are:
The two judgments above will not change how we assess which cases may be suitable for a more bespoke funding arrangement, but where we are dealing with a 1975 Act claim it will certainly inform our advice as to recoverability and the potential size of any claim.
As always, the key to the subject of costs as between a solicitor and client is transparency. This is why we were pioneering in producing a Transparency Guide, which can be found at https://idrlaw.co.uk/wp-content/uploads/2020/02/idr-law-transparency-guide.pdf.
IDR Law is an approachable, boutique firm and the only one in the country dealing solely with inheritance dispute resolution. Whether you’re a law firm, or an individual who feels they would benefit from our expertise, get in touch here, email us at email@example.com or call on 01423 637050.