When pursuing cases that involve a minor or protected party, the Court may take the view that the success fee and ATE premium should not be deducted from the damages due to the low risk these cases present. Although this situation may occur predominantly in road traffic accidents, it can also apply to other personal injury and clinical negligence cases.
This is not a view that Temple hold, as we believe it cannot be said that any case brought by a minor does not involve a degree of risk – whether by way of a liability denial or extensive expert evidence.
Regardless of this, it is the responsibility of the Solicitor to ensure it can be demonstrated to the Court it is reasonable to deduct these additional liabilities. Temple has reviewed this scenario with costs lawyers – Kain Knight and can provide the following advice;
Solicitors must be familiar with CPR 21.12 Practice Direction 11 and ensure it is followed.
CPR 21.12 provides:
Expenses incurred by a litigation friend
(1) Subject to paragraph (1A), in proceedings to which rule 21.11 applies, a litigation friend who incurs costs or expenses on behalf of a child or protected party in any proceedings is entitled on application to recover the amount paid or payable out of any money recovered or paid into court to the extent that it –
(a) has been reasonably incurred; and
(b) is reasonable in amount.
(1A) Costs recoverable in respect of a child under this rule are limited to—
(a) costs which have been assessed by way of detailed assessment pursuant to rule 46.4(2); or
(b) costs incurred by way of success fee under a conditional fee agreement or sum payable under a damages based agreement in a claim for damages for personal injury where the damages agreed or ordered to be paid do not exceed £25,000, where such costs have been assessed summarily pursuant to rule 46.4(5).
(2) Expenses may include all or part of –
(a) a premium in respect of a costs insurance policy (as defined by section 58C(5) of the Courts and Legal Services Act 1990); or
(b) interest on a loan taken out to pay a premium in respect of a costs insurance policy or other recoverable disbursement.
(3) No application may be made under this rule for costs or expenses that –
(a) are of a type that may be recoverable on an assessment of costs payable by or out of money belonging to a child or protected party; but
(b) are disallowed in whole or in part on such an assessment.
(Costs and expenses which are also “costs” as defined in rule 44.1(1) are subject to rule 46.4(2) and (3).)
(4) In deciding whether the costs or expenses were reasonably incurred and reasonable in amount, the court will have regard to all the circumstances of the case including the factors set out in rule 44.4(3) and 46.9.
(5) When the court is considering the factors to be taken into account in assessing the reasonableness of the costs or expenses, it will have regard to the facts and circumstances as they reasonably appeared to the litigation friend or to the child’s or protected party’s legal representative when the cost or expense was incurred.
(6) Subject to paragraph (7), where the claim is settled or compromised, or judgment is given, on terms that an amount not exceeding £5,000 is paid to the child or protected party, the total amount the litigation friend may recover under paragraph (1) must not exceed 25% of the sum so agreed or awarded, unless the court directs otherwise. Such total amount must not exceed 50% of the sum so agreed or awarded.
(7) The amount which the litigation friend may recover under paragraph (1) in respect of costs must not (in proceedings at first instance) exceed 25% of the amount of the sum agreed or awarded in respect of—
(a) general damages for pain, suffering and loss of amenity; and
(b) damages for pecuniary loss other than future pecuniary loss,
net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions.
(8) Except in a case to which Section II, III or IIIA of Part 45 applies, and a claim under rule 45.13 or 45.29J has not been made, no application may be made under this rule for a payment out of the money recovered by the child or protected party until the costs payable to the child or protected party have been assessed or agreed.
Practice Direction 11 to CPR 21.12 provided:
Costs or expenses incurred by a litigation friend
A litigation friend may make a claim for costs or expenses under rule 21.12(1) –
(1) where the court has ordered an assessment of costs under rule rule 46.4(2), at the detailed assessment hearing;
(1A) where the court has assessed the costs to be paid by the child by way of summary assessment under rule 46.4(5)(b), at the conclusion of the hearing at which damages to be paid to the child are assessed or at the hearing to approve the compromise or settlement under Part 21, or at any time thereafter;
(2) where the litigation friend’s expenses are not of a type which would be recoverable as costs on an assessment of costs between the parties, to the Master or district judge at the hearing to approve the settlement or compromise under Part 21 (the Master or district judge may adjourn the matter to the costs judge); or
(3) where an assessment of costs under Part rule 46.4(2) is not required, and no approval under Part 21 is necessary, by a Part 23 application supported by a witness statement to a Costs Judge or district judge as appropriate.
11.2 In all circumstances, the litigation friend must support a claim for payment out in relation to costs or expenses by filing a witness statement setting out—
(1) the nature and amount of the costs or expense; and
(2) the reason the costs or expense were incurred.
11.3 Where the application is for payment out of the damages in respect of costs pursuant to rule 21.12(1A) the witness statement must also include (or be accompanied by)—
(1) a copy of the conditional fee agreement or damages based agreement;
(2) the risk assessment by reference to which the success fee was determined;
(3) the reasons why the particular funding model was selected;
(4) the advice given to the litigation friend in relation to funding arrangements;
(4A) a copy bill or informal breakdown in the form of a schedule of the solicitor and own client base costs incurred;
(5) details of any costs agreed, recovered or fixed costs recoverable by the child; and
(6) confirmation of the amount of the sum agreed or awarded in respect of—
(a) general damages for pain, suffering and loss of amenity; and
(b) damages for pecuniary loss other than future pecuniary loss, net of any sums recoverable by the Compensation Recovery Unit of the Department for Work and Pensions.
In summary, Solicitors must consider making an appropriate application in every case that involves a minor, and where a success fee and/or ATE premium has been incurred. Any application must be supported by a witness statement from the Litigation Friend clearly setting out the factors at CPR 21 PD 11.2 and providing the information/documentation as required by CPR 21 PD 11.3.
We understand that even when these procedures are being followed, the Court may not deduct the ATE premium and success fee from the Claimant’s damages. However, with the correct procedures being followed this should maximise the prospect of the Court making the appropriate deductions from the damages.
If you would like any additional information or advice please contact our Senior Underwriter, Peter Morgan at firstname.lastname@example.org or Nick McDonnell who is a Director and Costs Lawyer at Kain Knight email@example.com.
Peter Morgan, FCILEx
Peter has been at Temple Legal Protection since September 2011 having previously worked for a national law firm and insurer giving him valuable experience in both Claimant and Defendant work.
Peter is a Senior Underwriter within the Personal Injury and Clinical Negligence team and is responsible for assessing risks along with the day to day management of delegated authority schemes.
He is also available to help with any underwriting questions to ensure customers are getting the best of their ATE and funding products.
He is currently studying with CILEX to qualify as a Chartered Legal Executive which he will use to further develop his knowledge and expertise.