The judgement in Hirachand v Hirachand & Another [2024] UKSC 43 has led the court to make a ruling that success fees under ’no win, no fee’ agreements (also known as conditional fee agreements (CFA)) are not recoverable by persons bringing Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act) claims.
The Supreme Court considered the question of whether a financial award under the 1975 Act can include an amount to cover a success fee payable by a claimant to his solicitors under a CFA. A CFA is an agreement where a solicitor’s fee is dependent on the client winning their case. If successful, the client must pay a ’success fee’, in addition to the solicitor’s standard fees. These fees are not collected through a costs order in proceedings.
In Hirachand, the deceased husband left his estate to his wife excluding his two children. His daughter had severe health issues and was unable to support herself. She issued a claim under the 1975 Act saying that her father’s will did not make reasonable financial provision for her maintenance, and succeeded. She was awarded £138,918.00, which sum included £16,750 of her solicitor’s success fee. Her mother challenged the fact that the success fee was included into her daughter’s award and succeeded in her argument.
The court clarified that success fees cannot be included in such awards and that costs are to be dealt with separately under the court rules. The court also rejected the argument that maintenance under the 1975 Act included success fees saying that the costs of litigation are different from daily living expenses. The court therefore excluded from the order made, the sum of £16,750 for the success fee that was payable by the daughter to her solicitors.
The key takeaways from the judgement are that:
- courts must address litigation costs, including success fees, through costs orders, not by substantive financial awards.
- public policy prohibits awarding success fees as part of civil proceedings, including under the 1975 Act.
- financial maintenance under the 1975 Act does not extend to covering success fees or other litigation costs.
This ruling has significant implications for inheritance disputes and the treatment of CFAs, highlighting the importance of understanding the boundaries of financial provision under the 1975 Act and the limits of recoverable costs in litigation. For claimants such as the daughter in the above case, the decision highlights the need to carefully consider the funding arrangements for legal representation in inheritance disputes.