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Vanessa Shenton believes that the best way forward is for the litigating firm to cover both sides' costs.
Should a solicitor charge a success fee in CFAs? The justification appears to be that the solicitor is entitled to cover the costs of those cases which do not succeed. After all, the legal practice is taking the commercial risk of losing a number of cases.
Another justification may be to compensate for the lack of cash flow during the running of a litigious dispute.
It is possible to buy insurance to cover the risk of a client losing his case in certain litigious disputes. LawAssist is such a product.
It can operate as a stand-alone legal costs insurance product where both sides' costs are covered. It therefore takes the commercial risk away from the solicitor. The only justification which remains for a 'success' fee is the cost of money. Of course, many would argue that this is not a justification for lawyers to mark up their already marked-up costs.
Could a mid-way house be devised one in which the firm itself pays the insurance premium, has both sides' costs covered and therefore only needs to consider how to deal with the cash flow problem? This could be in the form of a 'success' fee.
However, if this cover was used in conjunction with a banking arrangement allowing the firm to draw down a proportion of costs and disbursements on account, then the justification for any 'success' fee may well be weakened.
LawAssist, which currently accepts about 70 per cent of cases, is flexible enough to accommodate cases both on a stand-alone basis and in conjunction with CFAs, but it is most important that the client should be aware of all the options available.
It is often the case that at the end of a successful matter the client is financially better off with LawAssist as a stand-alone product.
As many are aware, CFAs involve inherent conflicts of interest between the solicitor and the client. Products like LawAssist can provide an alternative to the proposed expansion of CFAs.
The benefits to the client are clear a 'no win, no fee' method of pursuing a valid legal claim without the financial penalty of a potentially large success fee but with the continuation of impartial professional advice from the solicitor.
The benefits to the solicitor are the retention of professional independence and the comfort of knowing that he is not taking a financial risk but an industry designed for the purpose is.
Why is this avenue not being investigated with the same vigour as the concept of CFAs is currently?