When is a “no win, no fee” agreement not a “no win, no fee” agreement?

Answer: when a claimant, who is a party to “no win no fee” conditional fee agreement (CFA) with his solicitor, dies before a “win” in litigation is achieved. In that eventuality, the “death” clause, which is a feature of most CFAs, takes effect: the CFA is terminated immediately and the solicitor is entitled to claim “basic costs” (as defined) for work undertaken to that date, irrespective of the stage which the litigation has reached. It follows that, although the much trumpeted expression “win or lose the case, it won’t cost you a penny” will be true in the sense that the claimant will pay nothing, that is only because he or she is no more: it will be for the personal representatives to settle the affairs of the deceased claimant out of his or her estate if there are sufficient funds available, for example from the sale of the family home, in order to do so.

If such an outcome gives the appearance of being unfair (after all, it is to be assumed that the deceased claimant would much prefer to live long enough to see the case won so that the spoils of victory can be enjoyed), a full and thorough exposition of the validity of the “death” clause is to be found in the judgment of Saini J on 24 October 2019 in Higgins & Co Lawyers Ltd v Evans (as Executor of the Estate of the late Frank Hughes).


On 2 March 2016, Mr Hughes, then aged 89, had instructed Higgins & Co to pursue a claim on his behalf for damages for personal injury in relation to a diagnosis that he had asbestosis, following his exposure to asbestos during his working life. To finance the case, he had made a CFA with the firm which contained standard terms that Higgins & Co would work on a “no win, no fee” basis but that, if the claim succeeded, a success fee capped at 25% of his damages would be deducted, leaving him with 75% of his compensation. It was established that in doing so, Mr Hughes had had legal capacity: indeed, he had been fastidious in keeping and filing written records.

The firm’s literature had explained the terms of the CFA in more detail (emphasis added):

“The Higgins & Co “no-nonsense” approach to claims ensures that your claim will be dealt with in a clear, simple manner with no jargon or hidden surprises for you to worry about along the way…
Benefit from our NO WIN-NO FEE-NO DELAY philosophy…
Pay nothing from the beginning, simply make the claim and we do the rest
…With Higgins & Co you don’t have to worry about any of the fees, before, during or after”

The CFA contained further standard terms that the agreement was a binding legal contract and that before Mr Hughes signed it, he should read everything carefully and in conjunction with various schedules and the Law Society Conditions which had been attached. The latter dealt with what would happen in the event that the CFA were to end before the claim for damages had been completed:

This agreement automatically ends if you die before your claim for damages is concluded. We will be entitled to recover our basic charges up to the date of your death from your estate. If your personal representatives wish to continue your claim for damages, we may offer them a new conditional fee agreement, as long as they agree to pay the success fee on our basic charges from the beginning of the agreement with you.”

By “basic charges” was meant work done by the firm from the start of the CFA until its termination, calculated by reference to each hour engaged on the case at hourly expense rates set out in the agreement and to be reviewed annually.

Sadly, and before the claim could be resolved, Mr Hughes died on 30 April 2018, and since Higgins & Co had not made any offer to continue with the case, the CFA ended under the death clause. Two months later the firm served a bill for its basic charges on his executors, one of whom was his granddaughter, Dr Evans. Unhappy with these charges, proceedings for detailed assessment under s.70 Solicitors Act 1974 followed, with the death clause being subjected to judicial scrutiny as to its enforceability. That issue was decided in favour of the estate, the Master holding that the clause was unenforceable under the Interfoto principle (see Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd), on the basis that terms which are particularly onerous or unusual will not be incorporated into a contract. Accordingly, the bill for basic charges was assessed at nil.

Round one to the estate, and disregarding the legalities argued before the court, it might be thought that where a CFA has been made with the assurance that “no fee” means just that, it will “not cost you a penny, win or lose” (save a success fee out of damages), it would be an odd outcome if an entitlement for the solicitor to charge could arise solely because the client has had the misfortune to die at the wrong moment!

The appeal

Not so, said Saini J on appeal. In the first place, Interfoto was inapplicable because the principle did not concern the general doctrine of unfairness, but on the contrary, only whether the term in issue was properly incorporated within the contract, appropriate notice having been provided. It had been clear that Mr Hughes had not been under any pressure to sign the CFA, which had also said on its face that it was a binding legal document, in respect of which he had been given the chance to ask questions. Since a person who signs a document, knowing that it is intended to have legal effect, will generally be bound by its terms, whether read or not (see L’Estrange v Graucob), there was no principle of common law which had obliged Higgins & Co to draw the death clause to Mr Hughes’s attention. Round two to the solicitor.

As to whether the clause was “unusual” or “onerous”, it was not. It was one that was standard and had been taken directly from “model” CFAs used in personal injury claims which reflected a sensible and fair allocation of risk in circumstances where the client was effectively receiving legal services free, being dependent upon the solicitor’s expectation that the claim would be successful so the firm would be paid. Round three to the solicitor.

Finally, the Consumer Rights Act 2015 (a point not taken below). The argument here was that the CFA, being a contract between a trader (Higgins & Co) and a consumer (Mr Hughes) required, under s.62, that the terms and notices were to be fair. If they were not, an unfair term or an unfair consumer notice would not be binding on the consumer. That argument also failed. In Saini J’s view, the death clause was simple and transparent. Had Mr Hughes asked “What happens if I die”, he would have been given a clear and straightforward answer. Fourth and final round to the solicitor. Appeal allowed.

The result, therefore, is that although Mr Hughes was told “you don’t have to worry about any of the fees, before, during and after”, those have been hollow words for his estate which, on the basis of the judgment, is liable to pay his solicitor’s costs for an unfinished case, which may never be completed and even if it is, could still be lost. True, the judgment refers to the statutory protection provided under the Solicitors Act 1974 so that only reasonable basic charges will be payable, but there is not much solace there for the estate either, since those proceedings will involve yet more time and expense.

Rethinking the death clause?

All this brings into sharp focus the unsatisfactory nature of the death clause as it appears in most “model” CFAs. The expression “Hard Cases make Bad Law” is attributed to Oliver Wendall Holmes Jnr, who fought in the American Civil War and was still a US Supreme Court Justice in 1932! Whilst the decision in Higgins & Co cannot be described as “bad” in that sense because it is clear, logical and well-reasoned, its outcome illustrates that it is the death clause itself which is at fault and requires a re-think, since the consequences of the judgment are capable of being of pyrrhic proportions for both sides.

In the present case, the clause has proved to be a disaster for the late Mr Hughes and his family, since his estate is liable to pay his former solicitors’ fees for a claim which the firm never completed. It has also put Higgins & Co and Dr Evans into a situation where they are in dispute with each other, rather than turning their collective guns on the real target, the tortfeasor responsible for the asbestosis from which Mr Hughes died. Even if Dr Evans is successful in reducing those basic charges, it is questionable for whose benefit that will be. If the case is ultimately won with costs, the effect of the Solicitors Act 1974 assessment will be that, for every pound taken off Higgins & Co’s costs, that will be one pound less for the tortfeasor (or their insurers) to pay, given the operation of the indemnity principle (that the paying party indemnifies only charges which the receiving party is liable to pay his own solicitor). Put simply, the estate will simply be doing the tortfeasor’s work for them.

As to the wording of the clause, “no win” has not meant “no fee”, but on the contrary “no fee, provided you don’t die first”! The judge commented that Mr Hughes could have asked “what happens if I die”, but that is a big ask for any 89 year old man, still less one suffering from asbestosis. A more pertinent question to be posed by the solicitors would have been whether a CFA with the death clause was an appropriate method of funding for a client of that age, where there was a strong likelihood that he would not survive the case. A CFA appropriately modified to anticipate such an eventuality would have been in the interests of both the firm and of those standing to benefit had Mr Hughes not lived to see the claim through to a successful conclusion. Instead, it has driven them into conflict with each other.

It is not all one way traffic against the claimant however. Where a CFA is terminated mid-case under the death clause, a solicitor who is no longer involved because the firm cannot offer a fresh CFA to the personal representatives, or where one is offered but refused, has no control over what happens next in the litigation. In these circumstances, unless the successor firm keeps the original solicitor informed of developments, the latter will remain in ignorance of the outcome, including whether a win has been achieved, thereby triggering an entitlement to the success fee. An example of where that can lead in terms of bitter and protracted litigation is to be found in EMW Law LLP v Halborg where exactly that had happened. The new firm did not disclose to the old firm how the litigation had been resolved, so the court was brought in to decide whether the former had an entitlement to see documents showing the outcome. Being able to bill when the retainer has been terminated on death, means that the outgoing solicitor will at least be able to claim basic charges for work undertaken up to that point for no charge.

Back to Higgins & Co. With limitations having been placed on the recovery of costs from losing parties following the implementation of s.44 Legal Aid, Sentencing and Punishment of Offenders Act 2012, the question “what happens if I die” where a CFA is being used, is now very much more in point than was the case when a winning party could be expected to obtain a full indemnity for costs from a losing party. In these circumstances, prospective claimants considering the use of a CFA, will be well advised to scrutinise the death clause carefully before signing up. If they do not do so, an ill-timed death will have the financial consequence that “no win” means “fee due”, no more, no less.

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