Industry must explain how it assesses cases, says MP

David Kidney MP plans to summon sections of the insurance industry to explain how they will tackle insurance for conditional fee agreements (CFAs).

Kidney, chairman of the legal affairs sub-committee of the Parliamentary Labour Party's Home Affairs Committee, decided on such a move after hearing a joint Bar Council and Law Society attack on government plans to abolish legal aid for personal injury cases in favour of CFAs.

A spokesman for the Bar Council says: “There was a discussion about the problems posed by conditional fees, and we made it clear that the question of insurance is far from resolved.

“Kidney says he's going to summon representatives of the insurance industry to explain how it's going to operate under CFAs.”

The Lord Chancellor continues to insist that insurance for CFAs will not be a problem. However, as The Lawyer revealed earlier this month, legal insurers are warning that many cases approved for legal aid funding will be too risky for them to take on.

The council spokesman adds that insurance companies are likely to demand success rates of 90 per cent, while the forthcoming test for legal aid can go as low as 50 per cent. Insurance companies, he says, could kick firms with lower success rates off their books, or not take them on board at all.

“The result will be that firms won't take on cases even though they have a good chance of success and satisfy the legal aid criteria, meaning a large swathe of cases that won't be covered,” he says.