Solicitors’ success fee reduced in clinical negligence claim: Chocken V Oxford University Hospitals NHS Foundation Trust  EWHC 3269 (QB)
Case Note by Jade Ferguson.
The claim arose from a failure to diagnose compartment syndrome after surgery which left the Claimant with permanent damage to his legs.
The Claimant was a Mauritian national with an uncertain immigration status. There was concern that he may be repatriated to Mauritius before the conclusion of his claim.
The Claimant instructed solicitors and entered into a conditional fee agreement (‘CFA’) which provided for the following staged success fee:
Stage 1 - 50% success fee if concluded before service of proceedings;
Stage 2 - 80% success fee if concluded 45 days before the date fixed for trial;
Stage 3 - 100% success fee if concluded at any time thereafter.
Following the letter of claim, the Defendant admitted breach of duty subject to causation. No offers to settle were made before proceedings were issued. Proceedings were issued on 13th February 2015. On 10th June, proceedings were served. On 29th July 2015, judgment was entered with damages to be assessed.
Following various offers and an unsuccessful joint settlement meeting, the case was listed for a 12-day High Court trial. 70 days before the trial was due to commence, settlement was reached in the sum of £2,850,000 lump sum plus periodical payments of £48,000 per annum rising to £85,000 per annum.
Master James dealt with the detailed costs assessment. She assessed the Claimant’s costs on the standard basis and assessed the staged success fee at 50%. She found that issuing proceedings did not increase the risk of losing so as to justify a further 30% success fee on top of the 50% pre-issue success fee.
The appeal was heard by Mr Justice Stewart. There were 5 grounds of appeal which are discussed below:
Ground 1 – Hindsight
The Claimant submitted that the Master used hindsight in her judgment as she took into account the fact that the Defendant subsequently admitted breach of duty.
On appeal, Mr Justice Stewart agreed that if the Master had used hindsight, that would be an error which would require the decision on the success fee to be set aside and the Court to exercise its discretion afresh.
However, it was held that the Master had not relied on hindsight. Her references to what had in fact happened were by way of a cross-reference to how reasonable the assessment was at the outset.
Grounds 2 and 3 – the Staging Point
The Claimant also submitted that the Master had erred in deciding that issuing proceedings did not increase the risk of losing.
The Claimant argued that the Master’s approach ignored the logic of staged success fees as explained in Callery v Gray  EWCA Civ 1117. When the CFA was entered into, the Claimant’s solicitors had no knowledge as to how the Defendant might react to the claim. It was said that following Callery, it was entirely proper to assume that if the Defendant was not prepared to settle on reasonable terms, there was a serious defence. It was submitted that the service of proceedings was therefore a reasonable trigger for the Claimant’s solicitors to set.
Mr Justice Stewart found that the CFA in the present case was wholly different from the one suggested in Callery. In Callery, the proposal was of a success fee of 100%, subject to a reduction to 5% should the claim settle before the end of the Protocol period. In contrast, the 50% success fee in the present agreement continued to increase in circumstances where the risks were all factored in from the beginning and could, if anything, only decrease e.g. (as happened) by an admission of breach of duty prior to issue of proceedings.
This case fell to be considered on its own facts, as Master James had made clear throughout her short judgment. It was held that the level of the success fee and any staging must be justified.
In the present case, the Master accepted a 50% success fee as reasonable from the outset, given all the risks (liability, Part 36 and risk of deportation in 2015). However, she did not accept that any increase was justified at the point chosen for stage 2. She considered that 50% was reasonable up to a point close to trial. This was a decision she was entitled to make. She did not fail to take into account factors which she ought to have taken into account: nor did she give inadequate weight to any factors.
Ground 4 – Level of Success Fee
The Claimant submitted that, even if the master was right to conclude that the service of proceedings was an unreasonable trigger point, she was wrong to conclude that the second stage success fee ought to be limited to the same level as the first success fee.
Following the decisions on the above grounds, it is unsurprising that this ground was also unsuccessful. It was held that the Master found, having regard to all the relevant risks, a 50% success fee was reasonable up to and including the point at which the case settled.
Ground 5 – Assessment
The Claimant initially argued that the Master failed to consider that the Claimant was a Mauritian national whose immigration status was uncertain. However, at the hearing, the Claimant conceded that this ground was based on a misreading of the judgment and the ground was no longer pursued.
The appeal was dismissed.
Key Points and Comment
- The Court must consider the facts and circumstances as they reasonably appeared at the time the CFA was entered into when assessing he reasonableness of the success fee.
- A staged fee agreement does not always justify a higher success fee closer to trial. The question was whether the level of risk justified the success fee at the time the CFA was signed.
- The risk of litigation will be assessed from the viewpoint of a reasonably careful solicitor based on what knowledge they had at the time of entering the CFA.
- The complexity and value of the claim does not necessarily increase the risk of losing, although there might be more difficulties in such cases.
- The Claimant relied on the case of Callery, a case which was decided in the context of low value road traffic accident claims. Practitioners ought to be cautious when relying on such cases in a clinical negligence context.
- In this case, the logic behind the two-stage success fee was based on the presumption that if the Defendant did not agree to settle on reasonable terms, there was a serious defence. However, it was held that there was no set point for the triggering of a stage in a staged success fee.
- The basis for determining reasonableness is not the trigger point. The reasonableness is based on whether the success fee was set at a level which was reasonable in light of non-recovery of costs anticipated at the date of the CFA being entered into. Therefore, although the Claimant can choose the date of staging, if an earlier trigger for a higher second stage success fee is chosen then the Claimant must justify the higher risk of non-recovery fees at an earlier stage.
A copy of the judgment is available here.