### Navigating the Complexities of Funding and Cost Recovery in Inheritance Act Disputes: Insights from Hirachand v Hirachand [2021] EWCA Civ 1498

Landmark Court of Appeal Decision Sheds Light on Funding and Costs in Inheritance Disputes

In a pivotal judgment that could have far-reaching implications for individuals embroiled in inheritance disputes, the Court of Appeal has delivered a significant verdict in the case of Hirachand v Hirachand [2021] EWCA Civ 1498. This case delves into the complex arena of litigation funding and the recovery of costs, particularly focusing on Conditional Fee Agreements (CFAs) and their success fees in the context of the Inheritance Act 1975 disputes.

The crux of the appeal in Hirachand revolved around whether it was an error for the Judge at first instance to include a lump sum payment towards the Respondent’s liability for a CFA success fee within the overall award. Traditionally, the Courts and Legal Services Act 1990 has barred the inclusion of success fees in costs orders under CFAs. This stance was reiterated in the prelude to Hirachand, where it was advised that success fees could not form part of an Inheritance Act claim.

However, the Court of Appeal’s unanimous decision has potentially shifted the landscape, recognizing that a success fee could be considered a debt by the claimant, thereby constituting a financial need that the court might address. This decision, however, does not guarantee the recovery of success fees and emphasizes that such an award “may not always be appropriate.”

The implications of Hirachand for legal practitioners and their clients are profound. It necessitates a thorough exploration of alternative funding options before resorting to CFAs. Legal funding through third-party specialists, deferred fees with interest, and insurance options like Before the Event (BTE) or After the Event (ATE) insurance are all viable alternatives that may be more suitable depending on the case’s specifics.

Moreover, the judgment underscores the complexity of Damages Based Agreements (DBAs) in 1975 Act claims, highlighting the need for careful consideration due to their stringent requirements and the unpredictable nature of claim outcomes.

The Court of Appeal’s stance, as articulated by Lady Justice King, suggests that the courts will regard the recovery of a CFA success fee as a measure of last resort. It implies that claimants may need to demonstrate that a CFA was their only viable option for litigation, potentially requiring disclosure of evidence regarding the exploration and dismissal of other funding avenues.

In conclusion, while the Hirachand judgment offers valuable guidance for those navigating the complexities of funding inheritance disputes, it also serves as a reminder of the importance of considering all available options. Moreover, it reinforces the principle that settling such claims outside of court remains the most desirable outcome wherever possible.

This landmark decision not only illuminates the intricacies of litigation funding in inheritance disputes but also prompts a reevaluation of how such cases are approached, with a clear message that the courts view the recovery of success fees through CFAs with caution.