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CFAs – no automatic 100% success fee

In RTA claims, may firms routinely set a 100% success fee and claim the maximum limit of 25% of total damages.

However, the CA has ruled that a PI firm could not recover a 100% success fee under a CFA without first ensuring that the client understood the risks of taking on the case.

The case in question involved a damages award of just £3,400 for an RTA from which the firm deducted £829 for costs and £349 for ATE insurance. This was contested by the client. The CA was unimpressed by the argument that claiming a 100% success fee is widespread under a CFA. The CA held that the client should have approved the costs and should have been given an assessment of the risk to justify a 100% success fee. The firm’s success fee was reduced to 15%.

However, the CA found that the firm was entitled to charge the ATE premium and that this did not amount to a disbursement.

See commentary by Hardwicke Chambers and Herbert v H H Law [2019] EWCA Civ 527.

 

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