Mr B suffered an injury from a faulty product he had just bought. He instructed a Solicitor under a no win no fee agreement and brought a claim against the manufacturer of the product. The claim settled for £20,000.
The Solicitor sent Mr B a bill for 25% of the compensation and sent Mr B the remaining 75% (£15,000). No details were supplied as to what costs were recovered from the opponent.
In fact the solicitors were charging an hourly rate of £350 per hour. They had spent a total of 25 hours on the case and so their total fees based on this hourly rate were £8,750. They then charged a 100% success fee applied to the hourly rate. So in reality this increased their hourly rate to £700 per hour. This took their total charges to £17,500.
They recovered a contribution towards legal fees from the Defendant. They could only recover an hourly rate from their opponent of £181 per hour. It is never possible to recover all of the time spent, and they agreed 22 hours at £181 totalling £ 3,620.
So the charges were:
Charges at normal hourly rate £8,750
Less contribution from Defendant £3,620
Shortfall charged to Mr B £5,130
PLUS success fee 100% of normal fees £8,750
Total charge to Mr B £13,880
As this was more than 25% of the compensation the charges were capped at £5,000.
Mr B applied to Court to challenge the bill. Although the case had settled two years earlier, as no proper breakdown had been supplied detailing all charges and giving credit for the sums recovered from the opponent, the time limits had not started to run and Mr B was allowed to challenge the bill.
The case went to a hearing, and the Court concluded that the shortfall of the normal charges not recovered from the opponent could not be recovered at all because the solicitors were charging too high an hourly rate and had not informed Mr B that he would be unable to recover that hourly rate from the opponent.
Also the Court held that the chances of success were 80%, and so a success fee of only 25% on the hourly rate could be justified.
So the sums allowed were as follows:
Normal charges £3,620
Success fee of 25% of above £905
Total charges £4,525
Less contribution from Opponent £3,620
Sum due from Mr B £905
Refund due from solicitors £4,095
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