Herbert v HH Law Ltd [2018] EWHC 580 (QB), [2018] 2 Costs LR 261



Judge: Soole J

Citation: [2018] EWHC 580 (QB)

Summary:

Solicitor-client costs are not incurred with the approval of the client under r. 46.9(3) unless the client gives informed consent to the costs to be incurred.

Longer text:

A Claimant who had been injured in a road traffic accident entered into a CFA with a firm of solicitors which provided that if successful she was to pay its basic charges, disbursements, ATE premium and 100% success fee.  The claim proceeded via the RTA portal and was settled when the Claimant accepted a Part 36 offer of £3,400.  The solicitors deducted a total of £1,178, being £829 costs (including VAT) and £349 the ATE premium.  The Claimant then consulted other solicitors who challenged the billed costs, arguing that the first solicitors had not conducted a risk assessment justifying the 100% success fee.  Before the District Judge, the success fee was reduced to 15% and the ATE premium was treated as a disbursement.  The cash account was approved.  The first solicitors were ordered to pay the costs of the assessment.  On appeal, the Court held that the client did not “approve” costs within the meaning of Rule 46.9(3) simply by consenting to the type or amount of costs to be incurred.  “Approval” required informed consent.  See MacDougall v Boote Edgar Esterkin[1].  The changes brought about by LASPO had not removed the risk assessment as a relevant factor when considering the success fee percentage increase on a solicitor / client assessment.  On assessment, the level of risk was likely to be the primary consideration for the Costs Judge.  If the client had given informed consent to the success fee percentage in the CFA, the presumptions in Rule 46.9(3) were likely to have been triggered.  If the firm’s business model meant that it provided for a 100% uplift in every case, irrespective of the level of risk, this would have to be explained to each client in sufficient detail to enable the client to give informed approval.  The appeal was dismissed.  The District Judge had correctly treated the ATE premium as a disbursement.  Permission to appeal has been given by the Court of Appeal.

Herbert v HH Law Ltd [2018] EWHC 580 (QB), [2018] 2 Costs LR 261

[1]  [2001] 1 Costs LR 118.

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