Work carried out by external cost assessors can be taken into account by firms calculating success fees on conditional fee arrangements (CFAs), the Court of Appeal has ruled.
The ruling marks a victory for trade union firm Rowley Ashworth, which brought the case to clarify the law on costs.
The case was sparked after defendant insurers in a personal injury claim brought by a Rowley Ashworth client questioned whether work done by external parties, known as costs draftsmen, to assess costs could be considered when calculating success fees.
Personal injury firms work on a no-win, no-fee basis, and charging success fees on successful cases helps reduce the risks associated with losing cases.
Rowley Ashworth had outsourced its cost assessment to Costings Ltd, and successfully argued that the expenses should be chargeable as part of its own success fee.
Lady Justice Hallett said: "The work done by Costings was undoubtedly solicitors' work. It was the type of work Rowley Ashworth was retained to do. Rowley Ashworth might have relinquished its work, but it never relinquished control of it and responsibility for it."
The case, Crane v Canons Leisure Centre, will have far-reaching consequences for all firms working under CFAs.
"This is work we can do, but we choose not to do so because it's less economic," said Rowley Ashworth partner Edmund Young.
Young said there had been a series of conflicting Court of Appeal decisions on the issue. The latest ruling will prevent clients from revisiting the issue of success fees after the case has been settled.
Costs draftsmen set the level of fees after cases have reached conclusion to determine how much the losing side should pay under the CFA regime.