Begum v Klarit

When assessing a success fee on an appeal, the court must match the additional liability to the realistic risk of success. The assessment should take account of the scope of permission to appeal, the strength of the trial judge’s findings and any arguments that cannot properly be reopened. A residual risk in litigation does not justify a high percentage. Assuming costs are otherwise equal, a 100 per cent success fee reflects approximately a 50:50 chance of success, while 70 per cent reflects approximately a 59 per cent chance. Where the appeal is highly likely to fail, a modest success fee is appropriate.

The defendant appealed an order made by Her Honour Judge Kirkham in Birmingham County Court. Chadwick LJ had granted limited permission to appeal on 30 July 2004. At the hearing, the defendant accepted that any success would have little practical value unless wider permission were granted, because the trial judge’s factual findings were not challengeable. The central issue was the appropriate level of success fees payable to counsel and solicitors in the appeal.

Disposition. The appeal failed in substance. The court nevertheless varied the order in the defendant’s favour by reducing the success fees for both counsel and solicitors to 15 per cent.

1. Assessment of risk. On a summary assessment of costs involving a success fee, the court must assess the actual prospects of success in the appeal. The relevant context included the limited permission granted, the strong factual findings made after the judge had seen the witnesses, and the absence of any realistic basis for challenging those findings. The respondent’s prospects of resisting the appeal were therefore exceptionally strong.
2. Relationship between risk and percentage. The theory of success fees is that remuneration in unsuccessful cases is recovered through additional remuneration in successful cases. Assuming the costs are otherwise equal, a 100 per cent success fee corresponds to an approximately 50:50 chance of success, while a 70 per cent fee corresponds to an approximately 59 per cent chance. The percentage must therefore reflect the risk actually undertaken, rather than a generic perception that litigation always carries some uncertainty.
3. Wider context. The court referred to the concern expressed by the House of Lords in Callery v Gray about success fees being negotiated without a direct financial incentive to reduce them. It also noted that agreements reached in road-traffic litigation had been embodied in amendments to the Civil Procedure Rules, but that no equivalent agreement applied to disputes concerning the sale of land.
4. Application. The very small risk in this appeal was properly allowed for by a 15 per cent success fee. The success fees of 100 per cent for counsel and 70 per cent for solicitors were accordingly reduced to 15 per cent in each case.

• Court of Appeal (Civil Division) — [2005] EWCA Civ 210. The appeal from Birmingham County Court failed in substance, subject to the reduction of the success fees to 15 per cent.
• Birmingham County Court — Order of Her Honour Judge Kirkham; citation not stated in the judgment. Chadwick LJ granted limited permission to appeal on 30 July 2004.