The use of CFAs to fund Inheritance Act claims and the impact of the Hirachand case

Laura Abbott, Partner in the Disputed Wills and Trusts team at Rothley Law, explains the impact of Hirachand v Hirachand & Another [2024] UKSC 43 on the use of conditional fee agreements (CFAs) to fund Inheritance Act claims.

What is the Inheritance Act 1975?

The Inheritance (Provision for Family and Dependants) Act 1975 (the Act) allows certain people (including spouses, cohabitees, children, and persons maintained by the deceased) to claim increased financial provision from a deceased person’s estate where the will or the operation of the statutory rules which apply on intestacy fail to make reasonable provision for them.

Due to the nature of the claim, claimants can be in difficult financial circumstances which means funding the claim can be a problem. There are various options available to resolve that, and largely it will depend on the claimant’s choice of solicitor and contractual arrangements agreed between them, however one common solution is a conditional fee agreement (CFA).

What is a conditional fee agreement (CFA)?

CFAs are otherwise known as, and commonly referred to as, ‘no win no fee’ agreements. This is because the client will pay nothing for their own legal fees if their claim is unsuccessful (apart from payments to third parties, known as disbursements, which may include court fees or mediation fees, for example). However, if their claim is successful, the client will pay their legal fees together with an uplift on them, known as a ‘success fee’ (to reflect the risk to the solicitor of losing and not being paid at all).

Hirachand v Hirachand & Another [2024] UKSC 43

The Supreme Court has recently considered the use of CFAs in the case of Hirachand v Hirachand & Another [2024] UKSC 43.

Case background

The case concerned an adult daughter’s claim for reasonable financial provision from the estate of her late father, pursuant to the Act. The claimant had been financially independent from her parents for most of her adult life and estranged from her father for a number of years. She suffered with a long-term psychiatric illness and was unable to work, and she and her two minor children were therefore reliant on state benefit provision.

The estate was valued at £554,000 and was left to the deceased’s wife, who was elderly, frail and living in a care home.

Original decision

The Judge granted the claimant provision in the sum of £138,918 (roughly 25 per cent of the estate), which he envisaged would be used to:

meet her income shortfall
fund psychological therapy
replace her car and white goods
meet her legal fees, including part of the success fee she owed to her solicitors under her CFA

This followed an unreported decision in the County Court of Bullock v Denton only nine days before where the claimant (in this case a cohabitee claim under the Act) was awarded £25,000 as contribution towards her success fee under her CFA.

Court of Appeal

The decision was appealed on two grounds:

the first ground related to a procedural point about the conduct of the trial during the COVID-19 pandemic
the second ground related to the consideration of the CFA and whether the court was right to include a sum as a contribution towards the success fee

The Court of Appeal dismissed the appeal and held that a success fee can be treated as a liability of the claimant and therefore be considered as a financial need for the purposes of the Act.

Supreme Court

On further appeal, the Supreme Court unanimously and conclusively held that the success fees are not recoverable as part of a substantive award for reasonable financial provision and should not be treated as a debt, liability or financial need of the claimant. The reasoning was, in short, one of policy that this is in line with other areas of litigation where success fees are not recoverable.

The Judge, Lord Richards, commented that it would “undermine the costs regime and produce an incoherent result if a party could recover base costs not under that regime but by way of the substantive award” in 1975 Act claims. The Judge further stated that there was no different principle applicable to success fees.

What is the effect of the Hirachand decision?

The decision restores the position pre-2020 when the case was originally decided and is a controversial one among practitioners. Some argue that for some clients CFAs are the only option to fund a case when they have a genuine financial need and allows for the Act to do the job it was designed to do; ultimately providing access to justice. The original decision in this case meant that claimants, where successful, were entitled to keep more of their award rather than it being effectively reduced by the success fee. The awards are carefully calculated to meet their reasonable financial need, so with that in mind the argument was it was appropriate to consider the liability for the success fee as part of their needs, otherwise the outcome of the award would not be achieved.

On the other hand, there was concern the floodgates had been opened to spurious and frivolous claims, and pressure on defendants to settle claims that are really without legal merit, because of the increased risk of exposure to liability for success fees. As a matter of public policy, in other forms of litigation success fees are not recoverable, so the original decision was considered to have allowed success fees to be recovered ‘through the back door’.

CFAs still have their place in funding claims pursuant to the Act. However, they may be less available as both solicitor and client are now taking on a greater risk in running a claim. It is almost certainly going to discourage weak claims or claims of borderline financial value, as any victory would be pyrrhic if eradicated through the success fee. So, overall, we are expecting a reduction in the number of claims. It is also likely we will see an increase in applications for interim provision for costs under Section 5 of the Act.

About the author

Laura Abbott is a Partner in the in the Disputed Wills and Trusts team at Rothley Law and is a member of the Society of Trust and Estate Practitioners (STEP).

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Publication updated

17 February 2025

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.