Discounted CFA Success Fees

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In the recent SCCO Judgment of The Commissioners for HMRC v Blue Sphere Global Limited the Court considered what was the appropriate success fee where the receiving party's Solicitors were acting on a discounted CFA which provided for them to be paid at a lower hourly rate if the case was unsuccessful.

The Costs Judge approved the paying party's suggested calculation that the risk factor should be applied to the difference between the rate paid if the claim was won and the rate paid if the claim was lost.

The discounted CFA provided for a rate of £500.00 per hour to be paid if the case was successful and a rate of £300.00 per hour if unsuccessful. It was accepted that this was a 50/50 case with a 50% risk of failure. The calculation used to arrive at the success fee was 50% x 200 (the difference between the two hourly rates) divided by 500 (the rate paid if successful). This resulted in a 20% success fee.

It is likely that this calculation will be adopted when assessing the appropriate success fee to be awarded in discounted CFAs.

If you'd like a word about this, or indeed about any other costs issue, please do not hesitate to contact me.

Andrew Neat

A Neat Legal Services - Law Costs Draftsmen and Legal Costs Consultants