England and Wales High Court (Senior Courts Costs Office) Decisions

IN THE HIGH COURT OF JUSTICE
SUPREME COURT COSTS OFFICE

		Royal Courts of Justice
		10th October 2005

MASTER O'HARE:

1. I am now going to give a decision on the success fees to allow for solicitor and counsel in the appeal against the arbitrator's award. Both of you have mentioned the success fees appropriate in the arbitration itself. The appeal success fees were largely derived from them.
2. The sums claimed for counsel and solicitor are 100 per cent and 75 per cent respectively. The sums offered by the defence are 66 per cent and 25 per cent with a technical challenge as to the date of coverage of the success fee.
3. I have reached a clear decision on what I think the success fees ought to be. I prefer to start with that and then give you my reasons. I think the success fee for solicitors should be 50 per cent and the success fee for counsel also should be 50 per cent.
4. I will deal first with the technical points about the variation of the solicitors' CFA and the knock-on effect that might have had on counsel's CFA. I think that the variation was wholly effective. By varying the CFA the solicitors and claimants were not seeking to improperly increase the opponent's liability. It is possible that, once parties suspect they may get a favourable result, they might be tempted to try to rewrite history and claim larger success fees, but that was not the reason for this variation. The reasons here were fully and persuasively explained by Mrs. Songhurst, in that the company was getting into difficult financial waters and anticipated the bad effect that could have on this litigation and took administration proceedings to protect this CFA and their rights in the litigation, and not to improperly increase them.
5. I think the mechanics by which risk assessments were done for the solicitor and for counsel were both flawed in different ways. The system which seems to suffer the greater number of flaws is counsel's system. Counsel appears to have adopted the old arithmetic. He talks about the case having a 57 per cent chance of success. That would justify his old success fee but he claims a new success fee of 100 per cent without altering the arithmetic. The reasons he gives in the CFA are not a full risk assessment, and can easily be challenged as vague and unduly pessimistic. Such reasons often are.
6. The solicitor's risk assessment was flawed in the sense that it was built upon the previous one multiplied by 150 per cent. I do not think it is right to say that the claimant's chances of appeal were 150 per cent worse than their chances in the original claim.
7. Neither side thought that this arbitral award would survive the appeal. The arbitrator had decided an issue which had not been argued before him, and the claimants were confident that that would be sufficient to get the relevant part of his award remitted back to him, and they were right in that. But the defendants were also expecting some remission to the arbitrator. What they wanted was to get the whole lot remitted back to him, because this would re- open the defences he had rejected. What history tells is they failed in that, but I am not judging it by hindsight, I am judging it at the time. Both sides thought that arbitral award would be going back, would be challenged, would be destroyed in one way, and that means a successful result was always on the cards for this claimant.
8. I say that because of the definition of "win" in the solicitors' CFA. Before I read it out it is convenient to record that, as is standard practice, the barristers' CFA defines "win" in the same terms.
9. The definition of "win" in this case for the solicitor is:

"If your challenge to the award is accepted by the court and the award is either set aside in whole or in part or is varied by the court in any way or is remitted to the arbitrator for consideration, either in whole or in part..."

This means that anything going back to the arbitrator or anything destroying that arbitral award is a win, but it has this further qualification. You have to clear a second hurdle:

"…and also your claim for damages is finally decided in your favour."

In the arbitral award the claim for damages had been wiped out by refunds of payments, but now they were seeking to go back for an increased bonus, a bonus for other years, and maybe for no repayments or less repayments.

10. The chances of not getting a favourable result on the damages claim is a possibility, but it is a fairly nominal risk if the appeal succeeded, so what we must judge is whether the appeal would succeed. The claimants themselves described this as a low risk case, in other words a case about which they had high confidence at the arbitration stage. I think they still express themselves very pessimistically by having a 57 per cent success fee, but nevertheless I think they are right to call it a low risk case. My assessment of the chances of winning are that this was a 66 per cent chance. Thus, if you had three of these cases and they were all the same, you would win two of them, and would only lose one. Each of the winners would need to recover half the costs of the lost case. That is why I get a success fee of 50 per cent for the solicitor.
11. I allow the same success fee for the barrister because I see no relevant distinction between them. Both were making their agreements at the same time, and the reason suggested by Mrs. Songhurst for extra for counsel, a reason which Mr. Worman was willing to accept for counsel as long as it was to the strong disadvantage of the solicitor, the exposure to risk, I do not think that is a valid factor in assessing the success fee.
12. It is true that sole practitioners who do a lot of CFA work will expose themselves to more risk, but the size of risk in any particular case remains the same as it would for any other practitioner. If that were not so, then the success fees of solicitors who only do CFA work would have to be higher than the success fee of solicitors who do very little CFA work, and that just is not so. That is not the way we do it. We measure the success fee per case and not per solicitor's pocket. Although the parties agree that there should be a distinction between solicitor and counsel, I do not accept it. You have left it to me, and I think the riskiness of this case for solicitor and for counsel was the same, and that is why I have allowed both 50 per cent.
13. It may be helpful if I gave you a small indication on the arbitration. I think it is perfectly possible I could come to the same view, 50 per cent for the arbitration, because one cannot judge these things that finely. It is more likely that a lower figure would be appropriate because, after all, an appeal case does look riskier when you have lost the first time, but the way the case has been lost the first time here was a way which I think was so easy to attack. I do not think the success fee could be substantially lower than 50 per cent, and it may not be worth arguing about a few percentage points. Instead the parties ought to be able to get to agreement on that.
14. That is my decision on the success fee for both solicitor and counsel. I will write that into the bill. ____________