22 October 2021

The Court of Appeal’s decision in Hirachand v Hirachand [2021] EWCA Civ 1498 has stirred up a great deal of reaction. The decision means that as a matter of principle, a claimant who funds their case through a conditional fee agreement (which everyone knows as no win–no fee agreements) could recover part or all of the success fee from the defendant. That is a big deal because success fees – the uplift on the costs of the case if won - cannot be recovered in other forms of litigation.

The reason for the court’s thinking on this is that it has treated the success fee as a debt owed by the claimant, so that it forms part of the claimant’s current financial position, which the court is obliged to consider when determining whether to make an award under the Inheritance (Provision for Families and Dependants) Act 1975. It looks like a claimant will need to demonstrate that they had no other realistic way of pursuing the case and (as in this case) it does not mean that the whole of the success fee will be awarded. 

But, the case highlights what has always been an oddity in the 1975 Act jurisdiction, namely that because a claimant’s financial position is assessed at the date of trial, if they incur significant liabilities in legal costs in pursuing the claim, their likelihood of being seen to be in a poor financial position is that much greater when the claim reaches trial. This circularity of logic can be unappealing and can lead to a push to litigate from a claimant. From a defendant’s perspective, it highlights the risk of fighting out a 1975 Act claim. 

Most of these claims are resolved by agreement and this decision seems likely to add even greater weight to the settlement side of the scale.

What it is also likely to mean is a greater preparedness for lawyers to take on the risk of running 1975 Act claims on CFAs which, in turn, could lead to more of these cases, particularly as we start to see the impact of estate planning that may have been carried out in a hurry over the past 18 months.

If you have any questions about what we have discussed in this article, please contact Kevin Kennedy.

Key contact

Kevin Kennedy

Kevin Kennedy Partner

  • Estates and Land
  • Private Wealth
  • Agricultural Disputes

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