Bright v Motor Insurers' Bureau

Success fees under conditional fee agreements must reflect the risk that the solicitor will fail to recover costs, assessed by reference to the facts reasonably apparent when the agreement was made. The court must not use hindsight or apply fixed success-fee percentages that do not govern the agreement. A staged success fee is permissible, but each stage must be justified by the anticipated risk of non-recovery. The timing of the second stage is relevant only insofar as it bears on that risk. An appellate court should not interfere with a Costs Judge’s assessment unless there is a material error of principle or the conclusion falls outside the range of reasonable disagreement.

The claimant sustained catastrophic injuries after being struck by a reversing vehicle. The vehicle’s insurer avoided the policy, and the claim proceeded against the Motor Insurers’ Bureau. The claim settled shortly before a liability trial for a lump sum and substantial periodical payments, with costs to be assessed.

The claimant’s solicitors sought a 75 per cent success fee under a staged conditional fee agreement. Master Rowley assessed the recoverable success fee at 30 per cent. The claimant appealed, alleging errors in the assessment of litigation risk, the effect of the staged agreement and the relevance of fixed percentages under the Civil Procedure Rules.

1. Appeal dismissed. Master Rowley had correctly identified and assessed the risks relevant to the success fee. The appellate court would not interfere because there was no material error of principle and the assessment of 30 per cent was within the range of reasonable disagreement.
2. A success fee compensates solicitors for the risk that they will fail to recover some or all of their costs. Its reasonableness is assessed by reference to the facts and circumstances reasonably apparent when the conditional fee agreement was entered into. Hindsight is excluded. The relevant appellate threshold is a material error of principle or a conclusion plainly outside the permissible range.
3. A two-stage success fee is permissible where it reflects the changing risk of non-recovery. The solicitor may choose the staging date, but must justify the uplift at that stage. The proximity of settlement to trial does not, by itself, make the claim materially riskier. The principal question remains whether the fee was reasonable in light of the risk anticipated when the agreement was made.
4. CPR 45.16 and its fixed percentages were inapplicable to this high-value claim. They could not be used as benchmarks either for the first-stage fee or for determining whether the second-stage fee was reasonable. The contractual percentages were at large, subject to assessment by reference to the actual risks.
5. The Master was entitled to conclude that primary liability presented little risk because a driver had reversed at speed into a pedestrian. The material risks were the possibility of a Part 36 offer and the complications arising from contributory negligence. The absence of an admission of liability increased the risk, but did not justify the 75 per cent fee.
6. The claimant’s CFA Lite arrangements did not justify an additional uplift on the evidence. Any risk arising from the contractual allocation of unrecovered costs was distinct from the prospects of success in the litigation and was not shown to have been built into the fee.
7. The appeal was dismissed. Any outstanding detailed assessment issues were remitted to Master Rowley or another Costs Judge. The claimant was ordered to pay the MIB’s appeal costs, subject to assessment if not agreed.

• High Court (Queen's Bench Division): Appeal from Master Rowley’s order of 6 August 2013, following his judgment of 3 June 2013. The success fee was reduced from 75 per cent to 30 per cent; the appeal was dismissed.