Decision fans hot coals of debate

Meanwhile the British Coal decision has prompted further passionate debate over Lord Irvine's review of conditional fees.

Just three hours after the British Coal decision was handed down, the Law Society was publicly claiming the case would never have happened without legal aid.

Not surprisingly, the lawyers involved agree that under the Lord Chancellor Lord Irvine's planned extension of conditional fees the case would have been unlikely to have got off the ground.

“If we had gone to insurers with the British Coal case on day one I don't think they would have touched it,” says John Pickering, who heads Irwin Mitchell's PI department.

In fact, the Legal Aid Board only paid part of the case costs with the mine overseers' union, NACODS, funding five of the eight cases.

But Pickering argues that public funding is essential in such “ground-breaking cases”, with substantial costs such as expert witness fees building up before lawyers can even consider launching litigation.

However, he admits that a large firm like Irwin Mitchell may be able to fund a case like the British Coal action. Lawyers in other large firms also concede they may be able to take on such cases.

Hugh James partner Peter Evans disagrees. He says: “I don't think this case could be taken under conditional fees.” He argues that it will take 10 to 15 years of conditional fees experience in smaller actions before lawyers have the risk management skills to adequately assess whether to take a case of such magnitude on.

Insurers are already looking at how they can fund large multi-party actions more easily.

In the British Coal case, a number of individual clients were insured under conditional fee agreements but not the whole action itself.

“You can do it but currently it is not something that falls within an allowed conditional fees agreement,” says Bob Gordon, director of Greystoke Legal Services, whose firm insured around 40 individuals.

The Government is understood to be looking at the issue of funding multi-party actions as part of its negotiations with insurers over the introduction of conditional fees.

Lord Irvine has also made noises about setting aside a public war chest to fight ground-breaking cases, such as the British Coal litigation.

Lawyers involved in the case welcome this, but a few are worried about a potential conflict of interest that could see the Government deciding whether to spend million of pounds funding a large case that could cost one of its own departments multi-millions in compensation.

Even if conditional fees are introduced they could pose huge headaches for a profession often portrayed as money-hungry.

In the British Coal case, lawyers admit their fees “are into seven figures”.

But lawyers representing successful tobacco plaintiffs in Florida are expected to pocket $2bn of a $11.3bn settlement with cigarette manufacturers.

Although essentially taking a 25 per cent uplift (the percentage the English and Welsh Law Society already recommends), the US lawyers' actions have caused public outrage.

One reason is that conditional fees on damages are easy for the public and press to calculate once the level of any compensation is known.

Lawyers who win a case like British Coal could come out of court facing howls of outrage at the levels of their fees no matter what level of risk they have taken in the case.

Far from silencing fat cat rows, conditional fees could fan the flames. Many PI lawyers caught between legal aid and conditional fees risk being dammed if they do, and damned if they don't.