Success Fees – Children and Protected Parties
Prinz Nagalingam, Senior Solicitor Advocate
The 78th update to the Civil Procedure Rules will come into force on 6 April 2015. Amongst a raft of changes, some subtle and some less so, particular attention ought to be given to ‘Part 21 Children and Protected Parties’ with regards to costs payable by a child or protected party from a damages award. Generally, a proportion of the costs element which applies here will be the success fee element provided for in the CFA between the litigation friend and solicitor for the child or protected party, the ‘base’ costs having been recovered from the unsuccessful Defendant.
Success fees are of course no longer recoverable from a losing party but Parliament remains keen to ensure that the similar pre-Jackson rigours are applied to protect those who will ultimately fall to pay out the success fee element.
Care should therefore be given to the relevant practice direction to Part 21 and in particular, the burden upon the litigation friend to file a witness statement setting out the nature and amount of the costs or expense, plus the reason why the costs or expense were incurred.
Paragraph 11.3 goes on to clarify what the statement should include, with the burden being onerous.
As such where any additional liabilities are being sought out of the awarded damages the litigation friend’s witness statement must also include a copy of the CFA or DBA (damages based agreement), the risk assessment displaying how the success fee was determined, the reasons why a particular funding model was selected, the advice given to the litigation friend regarding funding, details of any costs agreed / recovered / fixed costs recoverable by the child, and finally a breakdown of damages recovered net of CRU.
In many ways this is a burden Solicitors ought to be used to as it follows well established principles of showing that alternative means of funding were considered, showing how a success fee was calculated and displaying that a valid CFA is in place. Anyone failing to comply risks failing to recover any success fee.