I typically wouldn’t be able to read the variety of conditional fee agreements (‘CFA’) of other law firms. However, I have received instructions from a wide range of law firms when seeking approval for a deduction in an infant approval case. This gives me the opportunity to consider them.
Although the fundamentals remain the same for ensuring compliance with CFA, there are some differences, mainly in the remuneration sought by the law firm from the Claimant’s damages.
When seeking approval for deductions from a child’s damages under CPR 21.12, instructing firms often fail to comply with CPR requirements, resulting in the deductions being disapproved before the starting pistol is even pulled. However, there are issues once the ‘race’ has commenced.
The variations
The remuneration usually comes in the form of either a success fee or a shortfall contribution. For ease, I will use the term ‘damages cap of 25%’, but it is of course only applicable to past losses and PSLA.
Success fee
The success fee’s percentage, which is typically calculated based on the risks involved, may sometimes allow for a fixed success fee. This was established in the case of Herbert v H H Law Ltd [2019] EWCA Civ 527, provided that the client has given informed consent (which the aforementioned law firm did not have). The percentage fee is generally calculated based on the base costs incurred by the law firm, such as hourly rates.
However, some firms’ CFAs are drafted in such a way that the basic costs are defined as whatever fixed recoverable costs are recoverable from the Defendant. This made it easier for firms to justify the success fee (subject to the approval of the success fee’s percentage).
The latter also gave some certainty for both the Claimant and law firm, but would lead to a lower yield of success fee, Here is an example of a £15,000 settlement within the MOJ portal:-
| Base costs | Fixed costs |
| Damages £15,000 | Damages £15,000 |
| Success fee 25% | Success fee 25% |
| Damages cap (25%) £3,750 | Damages cap (25%) £3,750 |
| Base costs £4,000 inc VAT | Fixed costs £1,740 |
| Success fee (25% of £4,000) £1,000 | Success fee (25% £1,740) £435 |
It’s quite the difference, but less so with lower value damages:-
| Base costs | Fixed costs |
| Damages £2,500 | Damages £2,500 |
| Success fee 25% | Success fee 25% |
| Damages cap (25%) £625 | Damages cap (25%) £625 |
| Base costs £4,000 inc VAT | Fixed costs £1,380 |
| Success fee (25% of £4,000) £1,000, but reduced to £625 to not breach the damages cap | Success fee (25% £1,380) £345 |
There is also the complication that the Court finds the success fee of 25% to be too high in all the circumstances and reduces it further, and its actual success fee drops far below the damages cap. This is where some law firms look to plug the gap with contributions to the shortfall.
Shortfall contribution
Most CFAs hold the Claimant liable for law firm costs, and some continue even after some costs are recovered from the Defendant. This is often described as the shortfall. There is a difficulty for Claimants who are able to recover costs on a standard basis and have those costs assessed by the Defendant. It then triggers the issue of s74(3) Solicitors Act 1974, which would only allow what could be recovered in party-to-party assessment within the proceedings (save for where express informed consent is given, which is what was the topic in Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387). However, in fixed costs cases, there is usually a significant deficit between the costs incurred and the costs recovered.
Therefore, while a law firm may limit any further liability to 25% of damages, they will exercise teh term to have the Claimant contribute to a shortfall, waiving their right to further costs thereafter. Here is an example below:-
| Shortfall |
| Damages £15,000 |
| Damages cap (25%) £3,750 |
| Base costs £4,000 inc VAT |
| Fixed costs recovered £1,740 |
| Shortfall between base costs and fixed costs recovered £2,260 |
As you can see, the shortfall is less than the 25% damages cap. The appropriateness of a shortfall contribution can be seen in circumstances where the costs recovered exceed the base costs (because the indemnity principle does not apply to fixed recoverable costs).
I have successfully justified a shortfall contribution in children’s cases by demonstrating that the work done by the law firm was reasonable and that, in the circumstances, a deduction should be made to allow the contribution. It is important to note that this deduction cannot be applied as a blanket rule and must be assessed on a case-by-case basis depending on the specific facts and circumstances of each case.
A combination of both
What some law firms will do is seek a combination of both, which the CFA allows for. It is accepted by the Claimant law firm that the total amount the can be deducted cannot 25% of damages.
So let’s presume a case where the fixed recoverable cost regime takes place, the success fee is limited to 10% and the CFA allows for a recovery of both a success fee and shortfall contribution.
| Damages £15,000 |
| Base costs £3,000 |
| Fixed costs recovered £1,740 |
| 25% damages cap £3,750 |
| 10% success fee on base costs £300 |
| Shortfall between base costs and fixed costs recovered £1,260 |
| 10% success fee + shortfall contribution £1,560 |
In some cases, the shortfall may provide a reasonable top-up and in other instances fill the gap where a success fee has been reduced considerably. The difficulty I have faced is that quite often, the Judiciary take issue with the combination of both. Sometimes it has been inappropriately described (at least, in my view) as a backdoor attempt to get around issues with the success fee.
I have found that success fees and shortfall contributions are more effective when pursued separately, rather than as a package deal. It is common for me to receive instructions with CFAs that include both provisions, but typically the law firm representing the Claimant chooses to rely on one deduction over the other.
I do find that my success in a combination of both is few and far between. That is not to say there is no success in such an appropriate, but Claimant law firms need to ensure CPR 21.12(10) is complied with, and the amounts are appropriately justified.
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.