AKS v National Farmers Union Mutual Insurance Society Limited

A protected party’s solicitor cannot deduct costs or a success fee from damages without court assessment and, where required, approval. A contractual percentage is not automatically recoverable. The success fee must be calculated by reference to the basic charges actually rendered and must be reasonable in amount. It should reflect the solicitor’s risk of going unpaid when the conditional fee agreement was made. Where the percentage exceeds the justified risk, the solicitor must show informed consent following a full and fair explanation. Approval by a litigation friend or protected party does not determine the amount recoverable. The court must assess the deduction according to established principles.

The claimant, a protected party, recovered £3.7 million in damages following a road traffic accident. Her solicitors, Seth Law Limited, sought assessment and approval of a costs settlement and a 25 per cent success fee deducted from her damages. A Court of Protection application concerning payment had been dismissed as procedurally incorrect, but the deputy subsequently arranged payment of £73,750.

The Senior Courts Costs Office considered whether the £220,000 costs settlement should be approved, the proper contractual and reasonable amount of the success fee, and the effect of the deputy’s and litigation friend’s approval.

1. Assessment and approval. The application could be determined by the Senior Courts Costs Office despite a possible procedural issue concerning venue. The costs settlement of £220,000 was approved. The applicable provisions of the Civil Procedure Rules 1998 required assessment before any solicitor’s costs or success fee could be deducted from the protected party’s damages.
2. Contractual calculation. The conditional fee agreement provided for a success fee of 25 per cent of basic charges. The best available evidence showed that the relevant basic charges, inclusive of VAT, were approximately £110,017.57. The contractual maximum was therefore about £27,504.39, rather than the £73,750 deducted.
3. Reasonableness and risk. Under CPR 46.9(3)(b), express or implied client approval created only a rebuttable presumption that the costs were reasonable. A success fee had to reflect the solicitor’s risk, at the time of the agreement, of going unpaid. The court considered that the claim was high value and low risk, liability had been admitted, and the agreement contained no effective Part 36 risk. A success fee above 15 per cent was unjustified.
4. Informed consent. Where a success fee exceeds the level justified by the risk, the solicitor cannot rely on the presumption of reasonableness without informed consent. Such consent requires a full and fair explanation. No evidence established that the claimant or her litigation friend had received such an explanation.
5. The success fee was assessed at £16,502.64. The previous order assessing the deduction at nil was set aside and replaced. Seth Law was required to repay the overpayment of £57,247.36. The approval of the deputy, litigation friend or protected party did not determine the amount properly deductible from damages.

First-instance decision on an application for solicitor-and-client costs assessment and approval concerning a protected party. The judgment records an earlier Court of Protection order dated 22 May 2023, which dismissed an application for authority to pay the solicitors’ costs because it was procedurally incorrect and insufficiently evidenced.