I have had instructions in the past where the instructing firm ask me to seek a deduction from a child’s damages in respect of the success fee. Naturally, whilst Judges and clients might find this to be a harsh request, personal injury firms take financial risks on both cash flow and profit when taking on cases on a CFA.
Whilst the biggest bugbear by the Judiciary is the generic risk assessment, it is usually the size of the statement of costs of hourly rate undertaken. A Judge needs to assess the basic costs undertaken on the matter because the success fee is based on the basic costs.
If the percentage of the success fee is not reduced, the basic costs may be reduced and this will limit how much the success fee will be. In some cases, I have solicitors calculate the success fee based on the fixed recoverable costs when the CFA expressly states basic costs are calculated on an hourly rate basis. This meant the Judge could easily dismiss the request for a deduction for the success fee because no hourly rate costs schedule had been provided. However, some firms actually have specific terms in their CFAs that base their basic costs on what is recoverable in Fixed Recoverable Costs at the time settlement.
I will discuss why this is a good idea, especially with the extension of the Fixed Recoverable Costs regime.
Pre Jackson Success Fees
I started working in personal injury just before the introduction of the Jackson Reforms. I actually became a fee earner with a case load with 85/15% post-Jackson reform cases so I dealt with success fees where it was recoverable from the Defendant. It is easy for me to understand how success fees were calculated.
I very much appreciate that junior fee earners today may not know or understand how success fees are calculated. They simply understand the concept that a success fee comes from deductions from the compensation and are up to 25% of damages. It does cause problems. I will receive instructions and I try to get the evidence to justify the success fee arranged but sometimes I am asked to simply ‘do my best’.
For those junior fee earners with no pre-Jackson reform experience. Your success fee would be calculated on the standard costs you’ve incurred. So if your client goes to trial, succeeds and you’ve got 100% success fee and £12,000 costs, then your success fee is £12,000.
Nothing changed post-Jackson reforms, merely that the Claimant could not recover the success fee from the Defendant and the maximum deduction from the damages was 25% of the PSLA and past losses.
Why base costs based on fixed costs works better?
Basing your basic costs on fixed recoverable costs, rather than hourly rates, give certainty to both the claimant and the law firm. There is no need to prepare a bill of costs (alternatively informal costs schedule or N260), there is no need for an assessment of costs and those costs will be proportionate to the stage of the proceedings.
Imagine you have a case which is pre issue, the medical reports are relatively straightforward and negotiation is quick and painless. If you submit a £4,000-£5,000 Phil, seeking a 50% success fee then you are going to be faced with the proposition of justifying that amount on assessment. That is before the consideration of whether or not a 50% success fee is reasonable.
Instead what happens is that you spell out in your client retainer the level of costs at each stage of the proceeding. You set out the range of success fees depending on the circumstance and you decide to justify a 25% success fee at it settles ex portal pre issue for £3,000 (RTA). That’s £840 in costs and the success fee is £210 inclusive of VAT. If proceedings are issued then it is £2,112 and the success fee will be £528.
These are moderately low sums and but one has to remember that with £3,000 (presuming this is not made up of any future costs) the maximum deduction is £750. Whilst a Judge could still reduce the success fee from 25%, the overall amount is modest and is more likely to be accepted as reasonable.
Of course it is also representative of the value of the case. Yes, you will have limited success fee on a £20,000 case that settles in the portal compared with if it exits. However, the client is full informed, it is proportionate and will reasonably top up the overall profit costs.
Whilst most instructions I receive are base costs calculated on hourly rates/units, I am seeing more and more CFAs using the fixed recoverable costs base cost model.
Information
AJH Advocacy Limited, a Limited Company which is regulated by the Bar Standards Boards (entity number 190758), ceases trading on the 12th January 2026.
From the 12th January 2026 and onwards, Alec Hancock will practice as a Barrister at Magdalen Chambers in Exeter. For instructions on matters on or after 12th January 2026, please contact Magdalen Chambers via clerks@magdalenchambers.co.uk or by telephone on 01392 285 200.