It seems the risk of CFAs is too great
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2 December 2013
CFAs have been around for two years, but many firms seem reluctant to offer them. Alasdair Pepper reports.
The majority of people cannot afford to hire lawyers to represent them in litigation of any substance on a normal fee-paying basis.
Historically, the options have been legal aid (when available), cover from insurance (if they happen to have a relevant policy), support from a professional body, trade union or employer, or muddling through with the fees for as long as possible. Because of the difficulties, the end result for many people has often been to forget legal action and put the matter down to experience.
Over the past two years the position has fundamentally changed, following the Conditional Fee Agreements Order, made by the Lord Chancellor in July 1998.
The order meant that for the first time lawyers were able to act for clients under Conditional Fee Agreements (CFAs), more commonly known as "no win, no fee" agreements, in all areas of civil litigation apart from family proceedings.
Has the increased availability of CFAs increased the ability of the public to obtain legal representation in litigation and secure redress through the courts? The answer should be that it has.
Lawyers ought to be able to advise with a reasonable degree of certainty on the merits of many actions and be prepared to back their own judgement.
Libel is traditionally regarded as an uncertain area of litigation. Most trials are before a jury, introducing an additional element of risk. But in many cases the merits of a complaint are fairly obvious. There is also very often a publisher of substance capable of meeting any award of damages and costs.
These factors, combined with the fact that legal aid has never been available for defamation cases, led to some firms launching CFA schemes for defamation and other media-related actions.
Many firms that regularly handle defamation work will also undertake cases on a CFA basis, but few actively publicise this. This appears to be the pattern across most areas of litigation with the exception of limited categories of cases, such as personal injury and employment. In these cases CFA work is becoming the norm and is actively advertised.
But most firms, while not advertising the fact, will undertake other types of cases on a CFA basis if asked to do so and are sufficiently confident that they will be able to recover their costs.
The reason that firms do not publicise CFA work is probably because reviewing applications takes time and offers no guarantee of pay-ment unless this is separately agreed.
Other concerns are the effect on cash flow and the reaction of existing and future fee-paying clients, who may also want their work conducted under a CFA.
Firms are more likely to publicly promote CFA work in categories of cases where the merits are easily assessed or where they have particular expertise and have the confidence to back their own judgement.
If an individual has a good enough case against an opponent of financial substance, they should be able to find lawyers willing to take the case on a CFA basis. The firms to approach are those with particular expertise in the relevant area.
The provisions of the Access to Justice Act 1999 came into force at the beginning of April 2000. It meant that the success fee and any insurance premium to cover an opponent's costs are now recoverable from the other side, as being costs of the action. Because of this the disadvantages of a CFA from the client's point of view have effectively been removed.
The availability of legal aid has been reduced as a result of the merits test being changed to the sufficient benefits test. In addition, there is a discretion to grant legal aid under the wider public interest test where proceedings have the potential to produce real benefits for individuals other than the client.
Access to legal representation and to redress via the courts has improved with the advent of the CFA. The increasing prevalence of ins-urance and other changes to the court system have also helped.
However, there may be a few costs caused by the changes. With greater access to legal representation at vastly reduced costs and with insurance reducing the financial risk, a more litigious society is encouraged.
The CFA also results in more expensive litigation for defendants in the event that they lose. They will be faced with paying the success fee that can be up to 100 per cent of the basic costs,
Alasdair Pepper is a partner at Peter Carter-Ruck & Partners