Goodwill or cut, thrust and a lack of trust?
17 March 1998
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28 June 2013
Antony Gold says conditional fees have the potential for damaging solicitor-client relationships and that CFAs could have a negative effect on the public's perception of lawyers. Antony Gold is head of litigation at Eversheds.
It is said that the Lord moves in mysterious ways and Lord Irvine is no exception. The proclamation of intent to move the English civil process to a conditional fee system has attracted a welter of comment.
Most of the concerns hitherto have focused on whether they make good financial sense for clients and lawyers,
However, there are other concerns, of arguably greater importance, relating to the solicitor-client relationship which will evolve under a conditional fee agreement (CFA).
For lawyers who have long-term relationships with clients, these are matters of particular interest because long-term relationships are based on mutual trust, not on the short-term economics of a single case.
At present, lawyers in this country assume that there is little to link anti-lawyer jokes (based around the premise that lawyers cannot easily be trusted and that they are motivated by self-interest and greed) and reality because the issue of costs, whilst a perennial and legitimate concern for both parties, rarely undermines long-term business relationships.
It is arguable that this is because, like other service providers, lawyers have transparent methods of charging, which are related to the skill and labour provided.
Once the method is agreed, the client and lawyer have similar interests and future decisions on the conduct of the case are unlikely to involve separate considerations of the differing positions of lawyer and client.
Businesses have strong negotiating positions and lawyers respond by being responsive to clients' needs, offering fixed price quotes for particular stages of a case, blended rates and other innovations.
They know that businesses can shop around, tender for litigation or use a panel of advisers in order to ensure the service is truly cost-effective. Businesses can negotiate on reasonably equal terms over rates and rarely feel disadvantaged in discussing costs.
Once the client is happy with the basis of charge, lawyer and client work together to solve the problem. Furthermore, many business lawyers are investing heavily in the idea of partnering positioning themselves to work alongside clients, exchanging ideas, information and sometimes staff, in order to ensure that they stay very much on the same side of the table as the client.
But what of this relationship under conditional fees? The concern is that fees will damage the trust which exists in a successful relationship between client and lawyer, replacing it with a suspicion of self-interest.
The lawyer's first task will be to undertake a risk assessment to ascertain the degree of risk he faces in handling the case and to set his fee. The client will be aware that he is no longer providing information to his lawyer in order to receive impartial advice but to assist the lawyer in negotiations with him on costs.
The solicitor-client relationship may no longer be comparable to patient and consultant and could become more akin to that of injured plaintiff and defendant's doctor.
If a CFA is entered into, the danger is that the parties will view the case as a business proposition, each with his own vested interest in the outcome. Considerations of financial recovery may affect the lawyer's judgement and, even if they do not, the client will suspect they have.
The client may no longer be able to pursue his case as he wishes when the risk is being shared. He will no longer be in a position to disregard his lawyer's advice, if he wants the conditional fee arrangement to continue.
He may find his autonomy further curtailed by the commercial interests of an insurance company if he has taken out after-the-event cover, which could be removed if the case does not proceed as the insurance company expects.
The Government claims that conditional fees will encourage greater access to the courts and benefit clients, as lawyers with a financial interest in the case are likely to be more commercially-minded when giving advice and will work harder.
If the choice for a client is between not pursuing an action and entering into a conditional fee arrangement, the latter course will have appeal, but the client's problem remains the same.
He will be concerned that the commercial interests being served may not be his own and that the outcome might be more satisfactory for his lawyer than for him. Far from increasing the public's estimation of lawyers and confidence in the system, the proposals seem likely to have the opposite effect.