INSURANCE companies could be employing delaying tactics in personal injury litigation to put pressure on firms hired on a no win no fee basis to settle early, the Law Society has warned.
The society's Conditional Fees Survival Guide raises the spectre of defendants “spinning out an action” or fighting harder in cases involving conditional fees.
The warning, described as pure speculation by one leading insurance lawyer, is designed to alert lawyers to some of the potential pitfalls of a no win no fee agreement.
“You should assume that defendants may be able to deduce that there is a conditional fee agreement in place, and you should prepare yourself for their reaction,” states the book, by Association of Personal Injury Lawyers president Michael Napier and journalist Fiona Bawdon.
It adds that delaying tactics may prove to be a “startlingly effective tactic” if a small firm in financial difficulties has taken on a conditional fee case.
“It may be uncomfortable to speculate what even the most honourable lawyer might do when faced with the choice of short-changing his client by
undersettling, or jeopardising his firm's financial viability by resisting delaying tactics from the other side.”
The warning, however, came as a surprise to City firm Barlow Lyde & Gilbert, which is well known for its defence work in personal injury cases.
Senior partner Ian Jenkins said the firm had no plans to operate such a strategy.
“At this stage I would have thought it was pure speculation,” he said.
“But I'm pretty sure that almost any large insurance company in the country will say that the quicker you can deal with a valid claim the cheaper it is.”
A spokeswoman for the Association of British Insurers said the body believed conditional fees would make no difference to procedures.