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5 December 2013
The consequences of getting the introduction of conditional fees wrong are dire, so why is Lord Irvine rushing to introduce them? ask Richard Fox and Richard Evans. Richard Fox is honorary secretary of the London Solicitors Litigation Association (LSLA) and a partner at Kingsley Napley; Richard Evans is president of the LSLA and a partner at Beachcroft Stanleys.
Extending the scope of conditional fee agreements (CFAs) may well substantially improve access to justice. But why is the Government continuing to insist that they be introduced across the board with one or two exceptions this April?
Lord Irvine's speech to the Solicitors' Annual Conference in Cardiff last October left many holes in his proposals which his department is still struggling to fill. Fundamentally, when setting out his blueprint for conditional fees and the timetable for their introduction, the Lord Chancellor seems not to have considered or fully appreciated any of the following:
The extent to which the introduction of conditional fees on such a widespread basis will require substantial adjustment to the way in which we run our practices. That includes reappraising how litigation departments are staffed, such as the number of fee earners needed for each case. Adopting the 'swings and roundabouts' approach, whereby the successful cases make up for the unsuccessful, requires a considerable volume of work if firms are not to be put in jeopardy. Is all this restructuring to be achieved by April?
It will be necessary to have sufficient 'after the event' insurance before any CFA can be put in place. At present the market is very limited. The only players are those that have serviced CFAs in the past, and these have involved almost exclusively personal injury cases. The Lord Chancellor clearly envisaged that insurance companies would rapidly make policies available for the introduction of conditional fees this year. The insurance industry may be keen to respond, but there is little time and a dearth of data upon which to assess the risk. One suspects there is a realisation that litigation in general cannot simply be compared with the experience of personal injury actions and that it may be difficult to keep premiums within reasonable bounds.
When the Lord Chancellor first spoke of introducing conditional fees across the board and, by and large, substituting them for civil legal aid, he appeared to have overlooked the position of defendants. What is proposed in this respect? The Legal Aid Board seems to have acknowledged this lacuna and it would appear that it is going to have to fund the defence of civil litigation after April while the Lord Chancellor re-thinks his position in this respect.
Lord Irvine's proposals have been introduced on the premise that CFAs have been an unqualified success since their first introduction. Where is the evidence for this. There have been problems. For example, how will solicitors recover their fees if clients breach the CFA? Surely a substantial review should be conducted before taking the step the Lord Chancellor proposes in only a few weeks time. Indeed, it has just emerged that the Policy Studies Institute is to conduct a major research project into the performance of conditional fees in the personal injury field. Is the Government going to await its conclusions before introducing the reforms?
Finally, what effect will all of this have on the integrity of the profession? Will its standing really be enhanced? Need our professional codes of conduct be revisited?
The message to the Lord Chancellor must surely be that although conditional fees may well have an important role to play in helping to ensure far greater access to justice than at present, other methods exist as well. These include many of the other proposals Lord Woolf has suggested for containing the cost of litigation.
Other sources of funding may also be considered, such as the Law Society's scheme to blend conditional fees with legal aid, and making 'before the event' legal expenses insurance more widely available.
We are keen to move forward, but why the need for such haste? The consequences of getting things wrong could be dire for litigation practices. How is that going to help the consumers that the Government is so keen to serve?