Give conditional fees a chance
10 November 1999
This Government's thinking on legal aid started with the premise that we must develop modern ways of paying for legal services.
One of the aims set out in our white paper, Modernising Justice, in December 1998, was to promote the availability of affordable legal services of an appropriate quality.
Conditional fee arrangements are a vital part of meeting this aim.
They enable those on middle incomes, who do not qualify for legal aid, to pursue strong cases without fearing financial ruin if they lose.
The use of conditional fee agreements also enables scarce public funds to be targeted on high-priority cases which cannot be funded in other ways.
Thousands of cases have already been funded through conditional fee agreements, with very few complaints about the way in which they have operated.
The evidence also points to the increasing use of conditional fee agreements in areas such as defamation.
Many of these cases would probably not have been brought if it were not for the existence of conditional fees.
An increasing number of law firms have found that conditional fee agreements are profitable when properly managed.
This Government extended conditional fees to all types of civil proceedings, except family proceedings, last year.
We also took action in the Access to Justice Act to make conditional fees fairer and easier to use.
At the moment, only people who expect to win money from their case can benefit from conditional fees. This is the only way that most people can afford to pay the success fee.
However, it means that a successful litigant will not receive all the money he or she has been awarded.
So we took the power in the act to make it possible for the winning party to recover the success fee, and any insurance premium from the losing party.
This will ensure that it is the person or organisation that has committed the legal wrong who pays, and allow defendants and claimants whose case is not about money to use conditional fee agreements.
However, the act provides only the legislative framework.
The details of the changes to conditional fees will be provided through secondary legislation, and the operation of the recoverability of the success fee and insurance premium will be informed by rules of court and practice directions.
We made a commitment during the passage of the act to consult before the provisions in the act were brought into force.
On 23 September, I launched a consultation paper, Conditional fees: sharing the risks of litigation, which meets this commitment. It is available on the Lord Chancellor's Department's website which can be found at www.open.gov.uk/lcd.
The paper has two purposes. First, it consults on the practical operation of recoverability.
It considers questions such as what information an opponent should be given about the conditional fee agreement and the insurance policy, and how we can remove the potential for hindsight in the assessment of the success fee and insurance premium at the end of a case.
Secondly, the paper explores whether further changes are required to ensure that conditional fee agreements operate more effectively.
This includes issues such as what information clients need to be given to enable them to understand fully the implications of a conditional fee agreement, and in what way the information should be presented.
I invite all legal practitioners to read the consultation paper and to send us your views.
Your comments and experience will be very valuable in helping to inform our final decisions.
Printed copies of the consultation paper are also available from the Lord Chancellor's Department on 0171 210 8774.
Responses should be sent to Helen Williams, Legal Services Division, Selborne House, 54-60 Victoria Street, London SW1E 6QW, by 26 November 1999.
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