The recent UK Supreme Court decision in Hirachand v Hirachand has finally laid to rest the question of recovery of success fees under conditional fee agreements (CFAs) in claims made under the Inheritance (Provision for Family and Dependants) Act 1975.
What are Conditional Fee Agreements and Success Fees?
A CFA, often referred to as a “no win, no fee” agreement, allows clients to pursue a legal claim without having to pay upfront legal fees. Under a CFA, the solicitor will only be paid if the case is successful.
To compensate for the risk of taking on cases without guaranteed payment, a success fee is charged on top of the usual charges, typically a percentage of the base costs according to the prospects of success of the case.
CFAs make legal services more accessible to clients who don’t have the financial resources to pay for legal representation upfront. However, since 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) prohibited recovery of success fees from the other party to a claim.
High Court and Court of Appeal Decisions
The purpose of the Inheritance Act is to ensure that reasonable financial provision is made for certain family members and dependants of a deceased person when the will or the rules of intestacy fail to do so. It gives the court a wide discretion to vary the distribution of the deceased’s estate
The effect of LASPO was that successful parties in Inheritance Act claims had to pay the success fee from the amount the court considered to be reasonable financial provision under the Act.
Therefore, the lower courts in Hirachand v Hirachand held that the success fee should be treated as a debt that the claimant is liable to pay and included in the Inheritance Act award a portion of the success fee to ensure that the claimant received the full amount of the reasonable financial provision from the estate.
Supreme Court’s Decision
The Supreme Court reversed the decision, ruling that success fees cannot be recovered from the estate in successful claims under the Inheritance Act 1975.
It comes as a disappointment to lawyers working for clients under CFAs for Inheritance Act claims but is understandable in preserving the statutory ban on recoverability of success fees and emphasises the sovereignty of parliament on policy matters such as this.
CFAs remain a viable and important option for accessing justice, but clients must be aware that the success fee is payable from their own award.
Why choose Awdry Law?
At Awdry Law, we understand the complexities of inheritance disputes and the financial concerns of our clients. We are happy to provide representation under CFAs for appropriate cases and our experienced solicitors are here to guide you through the legal process, ensuring you are fully informed about your options and the potential costs involved.
If you are facing an inheritance dispute and need expert legal advice, contact Awdry Law today for a free initial consultation.
