It is well established that a claim funded by a conditional fee agreement (“no win, no fee”), entitles the lawyers representing a successful claimant to claim a success fee in addition to their normal charges. The success fees in cases won by those lawyers cover them for work done in cases which they are paid nothing. Under the current system, success fees are paid by the insurers of unsuccessful defendants.
The success fee is based on a percentage uplift on normal charges (not a percentage of damages recovered). In cases where the success fee is not fixed, it is based on an assessment of the risk of losing. The riskier the case, the higher the success fee.
For example if the chances of success are 80% and the lawyers take on five such cases, then statistically they can expect to lose one of the five. The success fees on the four they win must pay for the one they lose, so the success fee for each of these cases should be 25% of normal fees. In this way the four successful cases pay for the one lost case. However, if the chances of success are only 67% and the lawyers take on three such cases, then the success fees on the two they win must pay for the one they lose and so this should be 50% of normal fees.
If a case goes to trial, then this normally means that the legal teams on both sides believe that they will probably win. This suggests that the chances of success are about 50:50. The claimant’s lawyers can expect to lose one trial in two and the case they win has to pay for the one they lose, so the success fee for a case which goes to trial is normally 100%.
In certain circumstances, the success fee is fixed by the court rules. The success fee is fixed at 12.5% for most road traffic accident cases and at 25% for most accidents at work. In employer’s liability cases involving certain diseases, the risk of losing is so great that the success fee is fixed at 100% even in cases that settle before trial. This was agreed with the insurance industry and is embodied in part 45.23 of the Civil Procedure Rules.
The definition of “disease” in part 45.23.includes stress at work claims, repetitive strain injury (RSI), and mesothelioma and other diseases induced by exposure to harmful substance. Whilst this may seem to be a fairly clear definition, its application is not always apparent as can be seen from a recent county court case of Timothy Bird v Meggitt Aerospace Ltd.
In this case, the claimant brought a successful personal injury claim against his employers alleging that the repetitive nature of his work had caused “tennis elbow.” Expert evidence suggested that the claimant’s injuries were a temporary worsening of symptoms of a pre-existing condition which was not itself caused by or acquired in the course of the claimant’s work. Upon settlement, the claimant’s lawyers claimed a 100% success fee on the basis that this was a disease claim. However, the court disagreed. An aggravation or worsening of symptoms could not be regarded as a disease as usually understood and defined. Further, the claimant did not contract this disease as a consequence of his employer’s negligence. The claim did not fall within part 45.23, which was created to provide clear guidance on the recoverability of success fees so as to avoid satellite litigation over the level of success fees. Obviously it was not successful in this respect.