Solicitors will in future have to provide a bill or breakdown of costs when seeking payment of success fees and after-the-event (ATE) premiums out of the damages of children or protected parties, the Civil Procedure Rule Committee (CPRC) has decided.
CPR 21.12 and CPR 21 PD11 were last amended in April 2015 to address the growing number of applications for payment out of children’s or protected parties’ damages.
Earlier this year, the sub-committee that produced those changes reformed to review the working of the rule and to consider whether any further revisions were required.
It put forward three changes, which were all approved by the CPRC and are likely to come into force next April. One was around PD21 para 11.1(1A). This provides that an application for payment out from damages recovered pursuant to rule 21.12(1) may be made “where the court has assessed the costs to be paid by the child or protected party”. Given that success fees and ATE premiums are not recoverable, the “costs to be paid” are the costs payable by the claimant to their own solicitor.
The sub-committee said: “It is remarkable how often applications are made in circumstances on which no solicitor/client bill has been lodged with the court nor, indeed, served on the litigation friend. The necessity for an assessment of the claimant’s costs liability to be undertaken before an application for payment out can be considered is simply not recognised by many solicitors.
“In order to determine the reasonableness of a success fee, it is necessary to ascertain the amount of base costs payable under the terms of the retainer. It is common, even in the absence of any considered risk assessment, for solicitors to enter into CFAs which provide for a success fee which equates to a 100% uplift on the solicitors’ base costs. In the absence of any information as to what those base costs are, the success fee of 100% of an unknown figure cannot be quantified and thus a determination of reasonableness, as required by rule 21.12(1), is impossible.”
The sub-committee observed that PD21 para 11.2(1) required the litigation friend to provide a witness statement setting out the “nature and amount of the cost or expense” but, as presently drafted, there was no specific obligation on the litigation friend (or solicitor) to lodge a copy of the bill of costs.
Paragraph 11.3(2) referred to the risk assessment but the sub-committee noted that, “strictly speaking”, the solicitor was no longer obliged to undertake one prior to entering into a CFA with a success fee. “Nevertheless, the provision of such an assessment is of considerable assistance (and, in the view of many district judges, essential) in the determination as to whether it was reasonable for such a cost to be incurred by the litigation friend.”
The sub-committee decided that the risk assessment provision should be retained, and that the practice direction should be amended to include “an express requirement for the lodgement of a copy of the solicitor’s bill to their client – or, in the alternative, a breakdown of such costs”.
The second issue was one raised by Mr Justice Turner in Leddington v Kabul  3262 (QB). As a result, rule 21.12(1A) will be amended to remove restrictions on the ability of a litigation friend, acting on behalf of an adult protected party, to recover costs and expenses from the claimant’s damages. These were meant to apply only to children and the rule will make that clear.
Finally, rule 21.12(8) will be amended to make it clear that the parties’ failure to agree disbursements in claims to which the fixed recoverable costs regime applies should not preclude the determination of an application for an order under rule 21.12(1).