Contingency fees are coming, and given the continuing problems with conditional fee arrangements (CFAs), it is surely about time they did. The Government has clearly got itself into a bit of a mess on this one, with almost every quarter distinctly unhappy at the operation of CFAs. Put simply, it is bad practice. The defendant insurers are angry at the levels of success fees and premiums; claimant solicitors believe that their clients are being denied access to justice (which is exactly what CFAs were supposed to improve); and the bar is losing money.
The insurers clearly have a point. The test case of Callery v Gray, due to go before the Court of Appeal soon, is a classic example. The success fee was set at 60 per cent but the claimant was a passenger in a car shunted from behind – virtually a case of strict liability.
Defendant insurers and solicitors allege that the Government’s failure to cap the success fee has left the system open to abuse by unscrupulous claimant solicitors. This is undoubtedly true, but even the decent, honest, hard-working ones are forced to ramp up their success fees on low-risk cases, simply to enable them to continue to represent individuals with deserving but high-risk claims. What choice do they have? Legal aid for personal injury was supposedly retained for high-value or public interest cases but only 15 such awards have been made since April 2000.
The bar is also suffering. Not only does 28 St John Street’s analysis of its exposure to CFAs reveal a 10 per cent drop in fees, but many barristers fear that the need for the pooling of risk is further eroding their independence and driving them ever nearer to partnership – or at best a “chambers factory”.
If access to justice continues to be denied to those most worthy (and I don’t mean the bar), the Government could be forced to reintroduce legal aid under the Human Rights Act. Clearly, that will not be allowed to happen, but it is equally clear that the current law is rotten. So, what’s the alternative?
Get rid of it, start again, and bring in contingency fees. There would be no need for after the event insurance; success fees would be abolished; both sides would bear their own costs and if there is an across-the-board increase in damages, the claimant will not lose out.
Simple. A little Americanisation is surely a small price to pay for the restoration of access to justice.