This is the next post in our series covering success fees and how firms can charge realistic amounts for their work and avoid the ever growing ‘check my legal fees’ industry.
In the last blog we went back to the very basics of what success fees are.
In this post we are looking at the way firms calculate their base costs. Most firms send out client care letters and Terms & Conditions which set out a realistic chargeable rate for work done. Conditional Fee Agreements entitle the Solicitors to charge the client in the case of a successful outcome. So, the solicitor can charge the client a base fee calculated by reference to this hourly rate. The success fee is an uplift on those charges. Many firms limit their base charges to the amount recoverable from the third party based on guideline hourly rates. Now there may be entirely reasonable commercial reasons for this but it is not necessary. Firms are entitled to assess their charges based on their chargeable hourly rate plus a success fee. What is recovered from the third party can be deducted from the charges, but the client is liable for the shortfall which is the amount to be deducted from the damages. In calculating fees this way, firms can assess their success fees by reference to the risk but still earn sufficient to make a living. If this is fully explained, then they cannot be attacked. In fact, most retainers already provide for this!
One word of warning though. You need to watch out for S74 (3) Solicitors Act 1974 –
“The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in the county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim”
But CPR 46.9 (2) says – “(2) Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.” So the CFA should expressly cover this.
In the next blog we will explore requests for files and what does or doesn’t have to be disclosed.