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Infant settlements and success fees – taking money from a baby?

As any PI practitioner will know, solicitors’ success fees, previously recoverable from Defendants, can now only be recovered from their own clients’ general damages. In infant settlement cases, where any deduction from damages requires the permission of the Court, this poses particular problems.

Under CPR 21.12 and the associated Practice Direction, before any deduction in respect of costs can be made from a child’s damages award, the solicitor must file a witness statement from the Litigation Friend covering a series of matters, including the risk assessment used, why the funding model was employed, and what advice was given to the Litigation Friend about it.

In A v Royal Mail Group [2015] EW Misc B24(CC) and B30(CC), the Regional Costs Judge for Birmingham, DJ Lumb, considered the approach which Courts should adopt when faced with these applications. In that case, which involved modest awards for children injured in a straightforward car accident, a witness statement had been filed by the solicitor and signed by the Litigation Friend. However, no copy of the risk assessment had been filed.

DJ Lumb said that “there were effectively no risks to insure against… when challenged by the Court to specify any risk that could justify taking out an ATE policy… [the solicitor’s agent] could not do so” (B24 at [27]). The Court refused to allow any ATE premiums to be deducted from the children’s damages.

Absent any risk assessment or details of the advice given to the Litigation Friend about the funding arrangement, the Court adjourned the matter to a detailed assessment – B30. At that hearing, it considered some of the general risks said often to be involved in these sorts of cases (at [28]), largely rejected them, and said that as the case was very low risk, the only success fee which would be deductible from the children’s damages was 10% ([32] – [36]).

This was a single case in a County Court, and as such is not, in principle, binding. However, it is the only recent detailed judicial consideration of the recovery of success fees in infant settlements, with a District Judge with great experience of costs matters delivering a reserved judgment on the subject. As such, it is likely to be followed by County Courts in run of the mill infant settlement cases up and down the country.

Ross Beaton / 8th Nov 2015


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