Miss Forde entered a conditional fee agreement with McGrath Solicitors in relation to proceedings against the Council for failure to repair her property (CFA1). Significantly, CFA1 did not include a success fee. Historically, the Council had had a poor record in housing disrepair and McGrath had been instructed by many tenants who had brought claims against the Council. In proceedings unrelated to those brought by Miss Forde, the Council challenged the validity of a conditional fee agreement between McGrath and another tenant that was materially in the same form as CFA1. To prevent any similar challenge to the validity of their retainer with Miss Forde, McGrath asked Miss Forde to enter into an “alternative” agreement (CFA2). McGrath explained that, under the terms of CFA2, Miss Forde would be agreeing that all of the legal costs to date would be dealt with under CFA2 rather than CFA1, unless a Court ruled that CFA2 was not valid in which case they would rely on CFA1. An important feature of CFA2 was that it contained a success fee.
Mr Justice Christopher Clarke dismissed the appeal and, amongst other issues, upheld the Costs Judge’s ruling that (1) CFA2 was supported by adequate consideration; (2) CFA2 could be retrospective; and (3) if a retrospective success fee was contrary to public policy, that did not vitiate CFA2 as a whole and, accordingly, CFA2 was enforceable. The claim for a success fee was withdrawn. However, in his judgment, Clarke J did not rule out the possibility of recovering a retrospective success fee and said that he did not “regard it as necessary to hold that a retrospective success fee is per se contrary to public policy“.
The funding of litigation in the UK is a hot topic at the moment with debate focussing on third party funding and the continuing development of conditional fee arrangements. We will continue to keep you updated on any future developments at www.insurereinsure.com.
