SHARP warnings from the Bar have greeted the Government's indication it will expand the “no win no fee” scheme to include other areas of law – and may even consider a US-style contingency fees system.
Speaking at a Policy Studies Institute (PSI) conference in London last week, Geoffrey Hoon MP, parliamentary secretary at the Lord Chancellor's Department, said he saw no reason why conditional fees should not be extended to commercial law.
He also suggested the government may revisit a contingency fee system, which would allow lawyers to claim a portion of their clients' damages.
But although the Law Society has expressed support for the government's plans to extend conditional fees, Daniel Brennan QC, chair of the Association of Personal Injury Barristers and a leading Bar Council figure, opposed such a move.
He said he was “extremely concerned” by Hoon's remarks and warned that too little was known about conditional fees to extend their scope.
“We still consider there is a real danger that lawyers using conditional fee arrangements will develop an American contingency fee mentality, whereby costs are fixed as a percentage of the sum claimed regardless of risk,” Brennan warned.
Professor Avrom Sherr, of the Institute of Advanced Legal Studies, also added a note of caution. He warned that conditional fee cases could be “cherry-picked” and the remainder of “bad” or unpopular cases left to legal aid.
Hoon replied: “That would have been an adequate comment to make in 1949 when most people were eligible for legal aid, but the fact is the majority of people today are not poor enough for legal aid and not rich enough to afford lawyers' fees.”
The debate followed the unveiling of the first major research into conditional fees which was conducted by the PSI.
The research showed that all except a handful of the 28,000 contingency fee cases undertaken since the scheme began were personal injury cases.
Contrary to fears that lawyers would double their fees, the average uplift rate was 43 per cent above the usual fees.
However, there was evidence that solicitors tended to over-estimate the risk involved in cases allowing them to justify a higher uplift.