The Bar Council has commissioned actuarial firm Watson Wyatt to investigate the cost to consumers of conditional fees, after accusing the Government of underestimating the value of success fees likely to be charged by lawyers.
Dan Brennan QC, vice-chairman of the Bar Council, said he had commissioned the firm after informal talks with actuaries indicated that the Government was being too optimistic about the ability of lawyers to keep success fees down in conditional fee agreements.
In its consultation paper on its plans to withdraw legal aid from personal injury cases, the Government quotes the findings of a recent Policy Studies Institute report on conditional fees. It stated that in three quarters of the successful cases it studied, lawyers had charged 50 per cent success fees or less.
But Brennan disputes these figures and claims lawyers will have to charge higher success fees which, when repaid, will often take up more than 25 per cent of their clients' damages the voluntary cap on what proportion of a clients' damages should go to their lawyers.
He said the Government had ignored the fact that lawyers would have to wait until the end of a case to get paid. “Added to the success fee, the lawyer will have to put an amount to cover the delay in payment and the cost of borrowing from a bank,” said Brennan.
Watson Wyatt has been asked to produce a report by 30 April, the end of the Government's consultation period.
But the Law Society's David Hartley said: “Many solicitors have considerable experience of setting success fees taking into account all the issues of current concern to the Bar.”
Meanwhile, the Bar Council is going ahead with plans to set up a working party to study Bar Council proposals for a Contingency Legal Aid Fund (CLAF).
The membership comprises Robert Owen QC, Irwin Mitchell senior partner Michael Napier, Ashley Holmes from the Consumers' Association, John Thirlwell from the British Bankers Association and Peter Smith of insurer First Assist. Brennan said the group would report in the summer, rather than by the April deadline.
Although dismissive of CLAF, the Government's consultation paper concedes that if the Bar shows CLAF to be viable, public funds to start up the scheme could be available.
Brennan said: “The Government are considering reserve statutory powers to create a CLAF should conditional fees not work. The Bar has taken the initiative in calling for an independent working party to report on the business feasibility of CLAF. This is clearly in the public interest.”