Herbert v HH Law Ltd

A client’s contractual agreement to a conditional-fee success fee does not, without more, establish informed approval or reasonableness under CPR 46.9. The court may consider the risk in the individual case when assessing the percentage increase on a solicitor-client assessment. A solicitor’s business model and market practice do not displace that requirement. An after-the-event insurance premium forming an inextricable part of the litigation funding package is a solicitor’s disbursement. It must be included in the solicitor’s bill and excluded from the cash account, so that the client can challenge it on assessment. A court may decline to investigate speculative allegations that a new solicitor’s retainer was procured by improper cold-calling where the issue is appropriately left to the regulator and further inquiry would be disproportionate.

HH Law acted for Ms Herbert under a conditional fee agreement in a personal injury claim arising from a rear-end collision. The agreement provided for a 100% success fee, subject to the statutory cap, and an after-the-event insurance premium of £349. The claim settled after a Part 36 offer.

On assessment, District Judge Bellamy reduced the success fee to 15%, treated the insurance premium as a solicitor’s disbursement, excluded it from the cash account and declined to investigate HH’s allegation that Ms Herbert’s new solicitors had obtained instructions through improper cold-calling. HH appealed on the interpretation of CPR 46.9, the classification and accounting treatment of the premium, and the alleged illegality of the new retainer.

1. Success fee. The appeal against the reduction of the success fee was dismissed. Under CPR 46.9(3)(a) and (b), client approval means informed approval, not merely consent embodied in a conditional fee agreement. The requirement is not confined to cases involving misleading conduct. Where a client challenges the percentage increase, the court must read CPR 46.9 as a whole and may assess the reasonableness of the fee under CPR 46.9(4).
2. The risk in the individual case remains a relevant, and ordinarily primary, factor in assessing the success fee. LASPO removed recovery of success fees from the paying party but did not exclude individual case risk from the solicitor-client assessment. If a firm adopts a standard 100% uplift under a post-LASPO business model, informed approval requires that approach to be clearly explained before the agreement is entered into. In the absence of informed approval, the costs judge must assess the fee in the particular case.
3. On the evidence, the absence of a risk assessment and the straightforward nature of the claim meant that a 100% uplift was unreasonable. The District Judge’s assessment of 15% was not challenged as being outside the permissible range.
4. ATE premium. The premium was a solicitor’s disbursement. It formed an inextricable part of the litigation funding package offered by HH, and HH paid it pursuant to its professional obligations under the retainer. The existence of a separate insurance contract between client and insurer did not alter that conclusion. The premium fell within the first rule in In re Remnant and, in any event, within the established professional custom identified in that authority.
5. The premium had to appear in the bill of costs and not in the cash account. The purpose of the cash account under CPR 46 PD para. 6.6(b) was not to bypass solicitor-client assessment. Including the premium only in the cash account would deprive the client of the opportunity to challenge it under the Solicitors Act 1974.
6. Alleged illegality. The District Judge acted within his case-management discretion in declining to investigate allegations that JG had obtained instructions through improper cold-calling. The evidence was speculative and expressly denied. It was proportionate to leave any professional-misconduct complaint to the SRA. The appeal was dismissed in its entirety.

• High Court (Queen’s Bench Division): District Judge Bellamy’s decisions of 28 April 2017 and 1 June 2017 were upheld. The appeal was dismissed.