A key ruling on success fees

Insurers have won an important battle on success fees in road accident cases.

In Atack v Lee and Ellerton v Harris, the Court of Appeal clarified what should happen in the thousands of cases where success fees are still to be decided by the courts.

This decision makes it clear that the 20% maximum success fee applies to most conditional fee agreements (CFAs) before 1 August 2001, not just the simplest case that settles before proceedings. For CFAs after 1 August 2001, 5% is now the norm.

This judgment should give insurers clarity and certainty and help restrict the runaway success fees still awarded at local level. Most road accident cases should now settle without the need for court assessment.

In Atack the claimant's solicitor, Amelans, had appealed against a 50% success fee award where the case settled at trial for £30,000, after a finding on liability. Lord Justice Brooke dismissed the appeal, holding that there was no guarantee of a 100% success fee just because the case went to trial.

In Ellerton, which settled for £15,378.79 shortly after issue of proceedings, the claimant was originally awarded a 30% success fee. The Court of Appeal allowed the defendant's appeal, reducing the success fee to 20%. This was still a modest and straightforward case and therefore 20% was the maximum to be awarded, following Callery v Gray.

' Andrew Parker is head of strategic litigation at national law firm Beachcroft Wansbroughs and acted for the defendants in both appeals.