20 September 2002

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Conditional Fees Update

Halloran v. Delaney

In the recent case of Halloran v Delaney (06/09/02) the Court
of Appeal reduced the success fee to just 5% in simple cases which
settle before proceedings begin. This might be seen as something
of a departure from the position the same Court took in
Callery v Grey, where it was suggested that 20% should be the
maximum success fee in such cases (see the Litigation Annual
Review 2002 at http://www.law-now.com/law-now/press.cfm?id=4258
for details and an explanation of what a success fee is).

In Halloran, the Court first confirmed that "costs only"
proceedings were part of the original 'claim', and were therefore
covered by the conditional fee arrangement and could attract a
success fee. The Court went on to say that it was 'now time to
re-appraise the appropriate level of success fee' that should be
recoverable on claims that are settled without the need for
court proceedings, and that Judges should now only agree to
an uplift (success fee) higher than 5% in such circumstances
where they are persuaded that it is appropriate in the particular
circumstances of the case. The court added that this policy
should be adopted in relation to all conditional fee arrangements
that have been, and are, entered into on and after 1 August 2001.

In a concluding paragraph at the end of the judgment, the Court
revived the two-stage idea suggested by Lord Woolf in
Callery v Grey (see above). He suggested that the uplift (success fee)
might (and again, it may well depend upon the particular facts) be
agreed at 100%, subject to a reduction to 5% should the claim settle
before the protocol period.

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