CFA Success Fees in Claims under the Inheritance (Provision for Family and Dependants) Act 1975

It is not uncommon for Claimants to bring claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) on the basis of conditional fee agreements – CFAs (also known as “no win no fee” agreements) with their solicitors.  When originally introduced, on “winning” the case, the claimant was able to recover the success fee (an additional amount that is payable to their lawyer for their legal services, over and above the amount which would usually be payable) from their opponent.  

However, since the Jackson Reforms of 2013, a successful party is no longer able to recover its success fee from the opponent as part of their claim for costs. Following the Jackson Reforms, it was therefore generally understood by contentious probate practitioners that the recoverability of a claimant’s success fee in a claim under the 1975 Act was prohibited.  

In two recent cases, Bullock v Denton [2020] and H (Deceased) [2020] the court has considered whether the claimant’s success fee under a CFA should be taken into account when determining what constitutes reasonable financial provision. Both claims were successful, and in both cases the judges determined that a CFA success fee should be regarded as a debt of the claimant, and thus be considered as a factor when considering the claimant’s financial needs and resources in determining an award for their reasonable financial provision.

The decision

In the previous case of Re Clarke [2019] the judge declined to increase the award to include a success fee on 5 grounds: (i) the calculation of damages is carried out before costs and has never included an element of costs (ii) to allow it would be contrary to legislative policy that the losing party should not be responsible for a success fee (iii) it would amount to an increase in damages by way of costs (iv) it may put a CFA funded party in a better position in terms of negotiation; and (v) it would put a 1975 Act claimant in a better position that one in a personal injury claim.  However, in Bullock v Denton and H (Deceased) both judges took the view that, as the success fee constitutes a liability which a claimant is contractually obliged to pay if they win, it would not be fair to ignore that debt, and thus it should be taken into account when calculating the award - although it should be noted that in neither case did the judge award the full success fee that had been claimed against each claimant under the CFA’s by their lawyers.

The implications

The decision is welcoming for those claimants in need of such funding arrangements in order to be able to pursue a claim as the success fee could otherwise significantly reduce their award, which is otherwise strictly limited to what is required for their day to day maintenance. Liability for the success fee may even have deterred some claimants from bringing a claim altogether.

The concern with such an approach however is that the decision is contrary to legislation that specifically provides that success fees are not recoverable.  It does undoubtedly provide claimants in 1975 Act claims a benefit compared to those in ordinary civil litigation who cannot recover such costs from the losing party. 

While each claim under the 1975 Act will continue to turn on its own facts, the two cases of Bullock v Denton [2020] and H (Deceased) [2020] will undoubtedly be relied upon  going forward by claimants seeking to persuade the court to include such liabilities in assessing their awards.  It will be interesting to see how the issue develops.  

If you need further advice or assistance, please contact our Disputed Wills and Trusts Team on freephone 0800 0931 336 or by email for a no obligation chat to see how we can help you.

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