The increase in the use of conditional fee agreements could create a two-tier profession, warns Steven Langton. Steven Langton is a barrister at Old Square Chambers.
Before 1 April this year, more than 50 per cent of personal injury (PI) claims were funded by legal aid. Conditional fee agreements (CFAs) made up a further 5 to 10 per cent of funding with the remainder being financed through legal expenses insurers, unions and private funding.
But with the demise of legal aid for PI claims, there is now a huge funding gap in the market which will undoubtedly be filled by CFAs. Overnight, more than 50 per cent of new PI claims will by financed by CFAs. The consequences will be profound.
Consider the insurance market, in the midst of a period of flux due to mergers as the major composite insurers fight it out for market share. We shall enjoy the curious spectacle of insurers selling products enabling claimants to fund actions against defendants indemnified by those same insurers.
The impartiality of the legal profession, and in particular the integrity of solicitors, will once again be put under public scrutiny. Having practised as a solicitor before being called to the bar, I am well aware of that treadmill feeling induced by the constant pressure to turn chargeable units into bills delivered at the end of each month. CFAs will place that income stream in jeopardy unless solicitors only accept CFA work which has good prospects of success.
Studies have shown that so far, solicitors are being advised not to take work on a CFA basis unless there is at least a 60 per cent chance of success and even then, they should do so with an uplift of 100 per cent.
The effect of the change in funding source is likely to be most noticeable in fast-track cases; I foresee that the current 25 per cent cap on uplift will have to be removed. It will be interesting to see what, if any, resistance is encountered when the uplifts are applied for on assessment at the conclusion of a matter.
The public perception of this? Lawyers feathering their own nests, of course, but the integrity of the profession could easily come under attack in a far more serious way.
Solicitors will have to comply with the stringent requirements of the new regulations in offering detailed verbal explanations of the nature and effect of CFAs to clients – reliance upon a client care letter will not be sufficient.
They will also have to declare any tie to a particular insurer. In both of these instances, lack of communication, a charge often levelled at the profession, will undoubtedly find a voice.
The profession will also have to overcome what will appear to be a conflict of interest between the lawyer and the lay client. Lawyers, and in particular solicitors, will, for the first time, be interested in the outcome of litigation as pay day will depend on it. But the interest of the lawyer may well be different from that of the lay client. The client will be concerned to achieve the best possible settlement, whereas the lawyer will simply be interested in achieving a settlement. Not the same thing at all.
The profession will have to guard against being seen to be recommending settlement at the first available opportunity (unless, of course, the first offer is a good one) simply to ensure that they get paid, rather than pushing for higher settlement figures, risking being paid only in part or not at all. The desire to achieve the best settlement for the client must not be seen to be tempered by commercial pressures. Unless lawyers keep their nerve – as well as their integrity – an increase in complaints to the Law Society and Bar Council is inevitable. The only winners will be the insurers who, in settling claims cheaply, will save millions.
Perhaps this is why, in an effort to avoid any criticism, some forward-thinking firms of solicitors have already decided not to instruct counsel on a CFA basis, so that they can, if subsequently challenged as to why a particular settlement was reached, rely on counsel's opinion as justification for recommending the settlement.
What will the likely effect be on access to justice? The two topics are, in my view, inseparable. Enquiries show that PI lawyers in the Republic of Ireland, who have worked for some time with similar agreements to those now introduced to the rest of us, shy away not only from claims in the 45 to 60 per cent success range, but from low-value claims, irrespective of the prospects of success. This is worth bearing in mind, particularly since, even after recent judicial consideration of the Law Commission's report number 257 on quantum of damages for non-pecuniary loss, general damages for pain, suffering and loss of amenity in this country still remain among the lowest in Europe.
If the trend in Ireland is repeated in this country, then not only will access to justice, somewhat perversely, be potentially restricted in cases where success is less than assured, but also in all cases involving relatively minor injury. Perhaps I am being too generalist in suggesting that access to justice will be denied to these claimants, but I certainly believe that access will be restricted. If good, reputable practices will not take the work on, who will be left? Those practitioners whose reputation for taking risks, by running cases of dubious merit or over-inflated claims, comes before all else.
At all costs, we must not allow the impact of CFAs to be the creation of a two-tier profession for the provision of legal services, with the best and most competent practitioners only being prepared to take on cases which will succeed and thereby prove to be profitable. The rest must not be left to take their chances.
Human Rights Act 1998
The European Convention on Human Rights, soon to be given the force of law in the Human Rights Act 1998, will confer sweeping changes to many aspects of English law.
One of the fundamental changes will be to wrest consideration of the applicability of the convention and of the act from the elected legislature and place it in the hands of the courts.
When the decisions of the European Court of Human Rights are more frequently applied and the rights determined and philosophies applied by that court are used in interpreting UK legislation, the handful of human rights cases at present is set to become a torrent. As a civil practitioner, I confine my crystal-ball gazing to the possible impact on civil procedure.
On the face of it, the act will only apply to the actions of public authorities; individuals are free to do as they wish. The court is, of course, a public authority; in determining the rights of the individual, it follows that it must act in accordance with the convention and in so doing will apply the convention to the individual. The ability of the court to act in a way compatible with the convention when adjudicating between private individuals is a matter still to be resolved.
The articles confirming the individual's right to privacy and the right to a fair trial illustrate its impact in the civil courts.
Surveillance has long been a tactical weapon used by defendants and their insurers in PI cases where the claimant is suspected of exaggerating symptoms, or, in the most extreme cases, of deliberately misleading the defendant in order to secure a larger award. Often using a concealed video camera, some surveillance firms in the past resorted to dubious tactics in order to gain access to the claimant's home.
Such practices are rightly condemned, but it has long been accepted practice to film a claimant in the street, travelling in vehicles, and at their property, usually when in the garden.
To what extent will this be permitted in the future? Quite simply, if in obtaining the footage the claimant's right to privacy has been infringed upon, the court will exclude that evidence.
This raises interesting problems. What if a claimant walks around his garden without trace of ailment yet elsewhere sees fit to effect a limp and use a stick? The court should consider excluding the footage of the claimant in his garden as being in breach of his right to privacy. But what if the defendant is able to show that the claimant is exaggerating his symptoms in public? To exclude the footage of the claimant from evidence in this way would arguably prejudice the defendant at trial. These are issues of conflict still to be determined.
Practical application of the assertion of the individual to have a fair trial will be known to many of you already. Non-compliance with pre-action protocols, failure to give disclosure, failure to exchange witness evidence as agreed, the filing of a highly-inflated schedule of past and future loss and expense with previously unseen medical evidence, refusal to allow a particular expert to give evidence at trial; all are examples of matters in which I have heard argument to the effect that an unfavourable decision would prevent a fair trial. I cannot help but wonder that, unless the court gives clear guidance, the act will become a refuge for the inept and the incompetent.
It is one matter to be genuinely deprived of a fair trial but to be in default as outlined above, having run the file incompetently or with disregard of the CPR only to go before the court seeking its indulgence, smacks of reliance upon that little-known piece of legislation, the It's Not Fair Act.
The CPR appears to run directly into conflict with the human rights legislation at almost every turn where the court may apply a penalty for non-observation or non-compliance with the CPR, ranging from the consequences of a failure to act in accordance with the pre-action protocols (or the spirit of them) through to a failure to lodge a notice of appeal in time.
Given the new spirit of practical cooperation which genuinely seems to have been generated by the application of the CPR, it would be a great pity if, in heralding in the changes in our human rights, the scope for procedural posturing and non cooperation takes us back again to the litigation Dark Ages.