We are starting a series of guest blogs with a very useful posting from Keith Hayward of Victory Costs: What happens to your retainer if your client dies?

Where you act under a CFA and your client dies before their claim is concluded, you might decide not to continue. After all the client is a major witness, particularly if liability is in dispute.  But should you decide to proceed it is important your CFA covers the situation and you understand what you need to do to ensure you retain the right to be paid both base costs and a success fee where the claim concludes successfully.

Whilst death does not in itself usually operate to end a contract ( see the Law Reform (Miscellaneous Provision) Act 1934), the Law Society model CFA provides that the CFA will automatically terminate, and the estate become liable for all costs incurred to date. The model CFA then states:

"If your personal representatives wish to continue with 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 our agreement with you.”

So a new CFA is required. This can be retrospective from the date of death, being the date the original CFA was automatically terminated.  If you want to recover a success fee on the first CFA the Personal Representatives (PRs) need to agree to this. This can be achieved simply by writing to the PRs making it clear you will only offer them a new CFA if they confirm their agreement to be liable for a success fee should the claim be successful, or alternatively the new CFA should record the fact that the new CFA was entered into on that basis.

Remember that where the success fee is not fixed by Part 45 it will be assessed at the date the new CFA is signed. So you will have to reassess the success fee, and if an admission of liability has been received this will impact significantly on the success fee that can be recovered.

An alternative to this is to amend the model CFA to remove automatic termination and state that the solicitor MAY terminate if the client dies, and the solicitor can elect whether to continue or terminate. That way the original CFA continues and the success fee does not have to be reassessed. The estate would still be liable for all base fees incurred to date if either side terminate.

Keith Hayward
Victory Costs

Just thought I would add a bit about After the Event Insurance here. If you have an ATE Insurance policy in place and your client dies then the policy can be transferred into the names of the personal representatives if they wish to pursue the claim. Just email us or call and we will ask the underwriter to make the changes!

Box Legal Limited: After the Event Insurance Providers
www.boxlegal.co.uk | daniel@boxlegal.co.uk | 0870 766 9997