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Let's clarify. Firms are not allowed to "deduct up to 25% of damages."

Firms are allowed to charge whatever they want so long as they comply with the requirements of the Solicitors Act and accept that the bill is subject to court assessment.

On court assessment, the court will determine whether the limit in CPR 46.9(2) applies, and whether those costs were reasonably incurred or of reasonable amount. Any doubt is in favour of the solicitor, and the costs are deemed so to have been reasonably incurred if they are approved by the client.

So if you want to charge the client £3,500 per hour, and the client expressly or impliedly approves this, then you are entitled to charge this.

If as a result of that charge of £3,500 per hour, the client's gets damages of £2,150, and you have an outstanding bill of £10,500 plus VAT, there is no legislation anywhere that stops you from "deducting" the whole lot.

If you have a conditional fee agreement, however, and that provides for a success fee (as defined in the amended Courts and Legal Services Act section 58(2)(b)), then it is the *success* fee which is capped. And not in terms of itself as a fee, but (by virtue of 58(4B)(a)) in terms of a "maximum limit" that must be expressed as a percentage of damages. That percentage being expressed in the regulations as being 25% for claims at first instance and (bizarrely) 100% on appeal.

The Act says that:- "a conditional fee agreement provides for a success fee if it provides for the amount of any fees to which it applies to be increased, in specified circumstances, above the amount which would be payable if it were not payable only in specified circumstances" and the success fee is the amount of the increase.

We all actually intrinsically know what a success fee is, but I am far from sure that the above is a correct and meaningful definition of it.

But either way, there's nothing to stop you deducting whatever the amount your proper amount of costs is from the damages (if agreed with the client) so long as any amount of the costs properly described as a "success fee" does not exceed the maximum limit.

So if District Judges on £105k+ a year want to be shirty about success fees of a couple of hundred pounds that were the clear intention of Parliament and the Rules Committee when making the 2013 changes, then the answer is simple. Don't have a success fee! Just have base costs.

It's a shame that we as solicitors, who pay into a fund every year compulsorily, don't have some sort of body, or society, who could champion our interests and give guidance on complex issues like this.

It could be called something like "the Law Society".

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