Two-stage success fees backed

Costs judges should be 'more willing' to approve high success fees in cases that have gone a long way towards trial if the claimant solicitor has agreed a much lower success fee for early settlements, the Court of Appeal said last week.

In his latest key ruling on conditional fee agreements (CFAs), Lord Justice Brooke halved a 100% success fee claimed in a tripping case that had moved towards trial, and where the claimant solicitor had used a single-stage success fee.


The judge made it clear that solicitors are not obliged to use two-stage success fees, as originally discussed in Callery v Gray in 2001. But those who did so would 'have the benefit of a high success fee for the cases that do not settle early'.


In setting the success fee at 50%, the court did not consider this a typical public liability case, such as tripping over a pavement - a child had fallen down a hole in a grass verge, and the likelihood of a successful defence 'was not particularly high'.


Her solicitors, Liverpool firm Paul Crowley & Co, initially valued the claim at £750 (although it eventually settled for £2,500) and feared that costs would not be recoverable if it ended up on the small-claims track.


Lord Justice Brooke added: 'In a claim as small as this, it is not reasonable that the defendants should have to pay the claimant's solicitor a higher success fee against the risk that the value of the claim was so low that legal costs would not be recoverable at all; this is a risk the solicitor must bear himself if he is willing to act at all.'


However, he also recognised that there is as yet insufficient empirical data to be sure that a 50% success fee - representing a 2:1 chance of success - is appropriate in such straightforward public liability cases.


Paul Crowley partner Terry Moran welcome the ruling, saying he plans to use two-stage success fees for trip cases, using 50% as the starting point.