Key Costs Implications from Perrett v Wolferstans LLP
The recent High Court judgment in Perrett v Wolferstans LLP ([2025] EWHC 68 (SCCO)) has implications for legal costs and client retainers. The case, before Costs Judge Rowley, highlights the need for solicitors to provide clients with clear and detailed advice regarding fee agreements and any potential costs liability arising from the same.
The claimant, Mr Ryan Perrett, had instructed Wolferstans LLP under a CFA to pursue a personal injury claim. The claim succeeded and the claimant secured an award of damages. The defendant, as per the terms of the CFA, advised the claimant of the deductions that would be taken from his damages.
The claimant raised a number of challenges to the nature and construction of the retainer agreement between the claimant and the defendant and regarding the method of assessment of the non-contentious costs contained within the defendant’s Bill of Costs.
It was the claimant’s position that the retainer agreement constituted a Damages-Based Agreement (DBA), which would have been more advantageous to the claimant than the CFA offered by the defendant. It was the defendant’s position that a CFA had been agreed, which catered for a success fee and which restricted the claimant’s contribution to 25% of recovered damages.
The claimant claimed he had been misinformed about his liability for costs and that his understanding was that all legal fees would be recovered from the opponent. The claimant alleged that the defendant had failed to comply with the Solicitors Regulation Authority (SRA) Code of Conduct by not providing him with the best possible information regarding costs recovery and alternative funding options, such as a DBA.
The defendant asserted that they had provided appropriate advice to the claimant. The CFA was the most appropriate form of funding (as they only offered CFAs or private paying arrangements) and they had complied with their obligations under the SRA Code of Conduct.
In brief, the court found that:
- The agreement between the parties was not a DBA but a CFA as it was caught by the provisions of the Solicitors Act 1974.
- The defendant had breached the SRA Code of Conduct as the information given to the claimant regarding the implications of the CFA was inadequate and it did not meet the “best possible information” standard required.
- The defendant was not obliged to advise the claimant as to the merits, or otherwise, of a DBA as this was not a funding arrangement that was offered by the defendant.
- The assessment of the non-contentious costs was reserved pending further consideration.
The judgment highlights the importance of client communication and transparency. It is vital that clients are not only provided with the ‘best possible information’ and clear costs explanations at the outset, but that they are also routinely updated throughout the life of the claim to ensure they are always accurately informed about their exposure to costs.
How can PIC assist?
PIC can assist you by undertaking routine costs reviews via our TTL+ service. PIC can periodically review your own client spend and inter partes costs risk during the life of your case. With this information, you can ensure that your client is always accurately informed about their current and ongoing potential exposure to costs. Please do contact us if you would like any further information about this service.
Caroline Brook, Senior Costs Consultant
06.03.2025