For some, coping with the death of a loved one or someone who has been financially supporting them, is even harder to deal with if they discover that they have not been adequately provided for in their Will or under intestacy rules. The prospect of challenging this predicament can be all the more daunting because of the expense. However, a recent decision may make funding the litigation, by way of a "no win, no fee" agreement with solicitors, less costly than it has been in previous years.
A "1975 Act claim" is an application made under the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision from a deceased person's estate. These applications can be made by various categories of people, including (but not limited to) a child, the spouse or civil partner of the deceased and (subject to certain criteria) someone who was living in the same household as the deceased as if they were married to or civil partners with the deceased.
It can often be difficult for applicants to fund their legal costs, especially in consideration of the fact that the reason they are making an application in the first place is because the deceased's Will and/or the effect of the law on intestacy did not make reasonable financial provision for them, so it is understandable that they could struggle to meet their legal fees, on top of their usual living expenses.
Conditional Fee Agreement (CFA)
One option for someone making an application under the 1975 Act is to enter into a Conditional Fee Agreement (also called a CFA or "no win, no fee" agreement) with their solicitors. A CFA means that the client does not need to fund their fees upfront or pay their fees during the course of the litigation; the fees only become payable if the applicant is successful in their claim. In exchange, and to balance the risk that the law firm is taking that they will not be paid their fees if the applicant is unsuccessful, there is an uplift (or a "success fee") which is applied to the fees incurred at the end of the legal proceedings if the applicant is successful. This can be up to 100% of the base fees. The applicant's base costs could be recoverable from the defendant(s) or the deceased's estate, however, until recently it was understood that any CFA uplift would not.
Until now, the uplift had to be covered by the applicant in the proceedings (a consequence of s.44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)), which meant it could reduce whatever the applicant was awarded. This position does not sit comfortably alongside the fact that an award (for financial provision) is determined by consideration of the applicant's needs. Therefore from an applicant's perspective, it may feel like a harsh consequence if they had no or little resources of their own, and their award was not so big as to leave a large surplus if the uplift then had to be paid out.
Two relatively recent cases have changed the position.
Earlier this year, the case of Bullock v Denton, was heard in Leeds County Court and HHJ Gosnell decided that the CFA uplift (which as noted above, previously the applicant needed to pay), formed part of her future financial needs under the 1975 Act. Given this, the judge concluded he was entitled to take that success fee into account noting "if I make no award under this head of claim the Claimant will have a substantial debt that she could only pay out of the other lump sum awards I have made."
In May 2020, another 1975 Act application was heard, this time in the High Court: Re H (Deceased) (2020 EWHC 1134). Significantly, Cohen J decided to follow the decision reached in Bullock v Denton, noting it would "not be fair on C [the Claimant] for me to ignore completely her liability to her solicitors". An amount of £16,750 (equating to approximately a 25% uplift) was allowed as part of the Claimant's needs, this being a sum which the judge regarded as a reasonable CFA mark-up (the CFA was in fact 72%).
What does this mean for the future?
There is the possibility Re H (Deceased) will be appealed, so we must wait to see if the decision will stand and, as ever, what may happen in any case will depend on the specific facts.
If the decision stands, what does this mean for potential applicants under the 1975 Act? Where someone may have previously been deterred from applying because of the additional financial burden of the success fee, they may now consider that a CFA is a more attractive option to help fund their case and decide to go ahead. For those applicants who have already initiated proceedings, they can now start to consider raising arguments regarding the recovery of their success fee.
Whilst Re H (Deceased) may be welcome news for applicants in 1975 Act proceedings, it conversely will have an adverse impact on other beneficiaries of the deceased's estate. If the Court allows a higher award than they would have done previously to take account of the uplift when determining the applicant's needs, it reduces what is remaining in the estate for the other beneficiaries (often those who the deceased intended to benefit).
From a legal perspective, it may mean more 1975 Act claims are being pursued, especially in cases where the margins between likely award and the likely success fee previously were too narrow to justify bringing a claim. Solicitors will note that Cohen J in Re H (Deceased) awarded what he considered was a reasonable success fee (which was only 25%, rather than the actual success fee which was 72%), so both litigants and solicitors will want to bear in mind that even if the Court agreed with their arguments that the uplift should be included as part of the applicant's needs, there may still be a shortfall if the Court awards a lesser percentage. Nevertheless, these decisions represent a positive and significant step forward for those trying to fund their 1975 Act claims.