Kennedys have now taken two clinical negligence claims to detailed assessment successfully challenging the unrealistic 100% success fees set by solicitors representing both Claimants.

Common to the majority of clinical claims we face, the Claimants were funded by way of a conditional fee agreement, with success fees of 100%. These funding arrangements, more popularly known as “no win no fee agreements”, double Claimant solicitor’s profit costs, resulting in huge disparities between the parties’ costs at litigation.

The cases show just how important it is for Defendants to challenge this disparity to ensure Claimant firms are not unjustly enriched and Defendants are not unfairly penalised on costs.

In both Barham v Barking, Havering and Redbridge Hospitals NHS Trust [2007] and most recently McCarthy v Colchester Hospital University NHS Foundation Trust [2008] the SCCO reduced the 100% success fees, expressing a strong preference for staged success fees as outlined in KU v Liverpool City Council [2005] and Callery v Gray [2002].

The Courts did not accept Claimant arguments that the 100% success fee was the only justifiable level at the time the CFA was entered, when there was little other information to go on to make an assessment of their client’s chances of success.

Claimant firms are being encouraged to enter 2-stage agreements whereby an initial success fee can be set and, if necessary, altered to reflect the more realistic chances of success upon receipt of further information.

Whilst Courts cannot retrospectively introduce 2-stage success fees on claims settled, they are able to reduce the success fee, if deemed inappropriate. In Barham the success fee was reduced from 100% to 67% and in McCarthy from 100% to 80%, reductions which saved the NHS tens of thousands of pounds.

Of further interest to Defendants is the Court’s approach to the CFAs themselves. Many agreements include a clause, which allows the Claimant firm to cease acting for their client at any time if they consider they are unlikely to win. This significantly weakens Claimant arguments made to justify 100% success fees. They say, by doubling their income on winning cases, they can afford to litigate the cases they lose. The inclusion of this clause however means many cases would end well in advance of trial, making Claimant costs of the winning cases (which are recoverable) significantly higher than those they lose.

In McCarthy we also successfully challenged Claimant arguments justifying high hourly rates. The Claimant solicitors submitted their “lock-up” is greater than Defendant firms who may be paid quarterly rather than at the conclusion of a claim. The SCCO was satisfied this formed part of the funding element of the CFA’s Success Fee and did not justify an uplift in rates.

To avoid 100% success fees being set before simple investigations have been undertaken, Claimant firms should be encouraged to utilise staged success fees at the start of each case, as soon as Defendants become aware of potential litigation. This may be at the start of a complaint or perhaps upon a request for medical records or documents. The earlier the better.