The latest issue on litigation costs is to suggest that law firms are liable to pay the other sides' costs if their client fails to pay the successful party's costs.
The argument arises out of the old and little-known torts of maintenance and champetry. Maintenance makes it unlawful for a third party, who has no interest in the litigation, from stirring up or defending litigation. Champetry refines that and exists where there is a contingency arrangement. Until fairly recently, these old torts were simply a one-paragraph entry in the law books.
The disincentive to litigation has always been that the losing side must pay the successful party's costs. There are strong public policy reasons which allow the torts to survive and develop.
With litigants encountering problems during the recession they have been looking for alternative ways of funding litigation and targets to vent their annoyance if they can't recover from the losing party. Following a number of recent cases, the courts seem to accept the principle that solicitors can be guilty of maintenance. In a case on contingency fees, it was held that a party maintaining an action could be liable for the losing parties' costs.
Some litigators have taken the two views together. Where their client can't recover costs, they seek to claim from the other side's solicitors. The solicitors are then questioned as to how they were funded for the litigation, which raises client confidentiality issues. Needless to say silence is then perceived as guilt.
It seems likely that these arguments will soon land law firms before the courts.
There are many reasons why solicitors may not be covered for the costs of litigation and indeed there are many cases where solicitors deliberately extend credit to their clients to assist them with litigation which the client could not otherwise fund. The concept of solicitors having to cover themselves from allegations of maintenance and champetry seems an unfortunate development and not one which lies easily with the current debate on easy access to the law.