Lawyers will pay the price

Lawyers see the introduction of conditional fee agreements as a government cost-cutting exercise that could damage the honour and integrity of their profession, says Orla Cole. Orla Cole is an assistant in the litigation department at O'Reilly Stewart.

Conditional fee agreements (CFAs) have not been introduced to date in Northern Ireland but there can be no doubt that legislation is being considered to align the system with the rest of the UK.

One possible factor against this is the fact that the current cost of both civil and criminal and legal aid in Northern Ireland is less per capita of the population than elsewhere in the UK. However, the general feeling is that change is inevitable.

The Legal Aid Board has asked for submissions from interested parties, which should be made by the end of June. In addition, the Civil Justice Review Committee is to compile a report on the issue by the end of the year.

But will lawyers in Northern Ireland welcome the introduction of CFAs? In theory they will “throw open the doors of the justice system to all who need to enter”. They will “bring access to justice for all”. These are the words of Lord Irvine in his justification for their introduction. Is this not what every lawyer wants?

Apparently not. Plaintiff and defendant lawyers alike cannot agree with these propositions. Their contention is that, in reality, access to justice is reduced. How can this contention be anything other than accurate with the associated abolition of legal aid?

Plaintiff lawyers assert that injured parties are in no better position to afford to bring their case. However, it is not only the injured party whose financial position is relevant. It is the lawyer's capacity to afford disbursements such as expert witness fees and court fees which has come into play. Small to medium-sized firms will experience cashflow difficulties. Even in a situation where every case is successful the lawyer will not receive money until the end of the case.

This in turn can only result in the temptation to settle cases quickly. The lawyer can no longer give objective advice to the client on the merits of accepting an offer of settlement. On the introduction of CFAs, any degree of objectivity is removed and solicitors are forced into a position of acting in their own interests and not necessarily in those of their clients.

Defendant lawyers assert that they are the losers whether they win or lose the case. Where a defendant wins the case he has incurred an insurance premium which, at the present time, is not recoverable from the plaintiff.

Where a defendant loses a case he is responsible for the plaintiff lawyer's fee and disbursements, including the insurance premium, and is thereby indirectly financing the plaintiff solicitor to bring further cases.

Likewise, with the uplift on a lawyer's fee being payable from a successful plaintiff's damages, a successful plaintiff is in fact indirectly subsidising an unsuccessful plaintiff's case.

This gives rise to an analysis of the intention behind any award of compensation. Compensation should make good the loss suffered and should be calculated on the basis of the loss suffered. However, in the situation of CFAs it is contended that an award of compensation can be restated as being for the purpose of funding unsuccessful claims for compensation.

The public image of lawyers is a further issue. While this may have already been damaged by the much used expression of “fat cats” among others, the danger is that lawyers' reputations will be worsened when it is seen that they will now be taking a proportion of their fees directly from the successful plaintiff's compensation.

Lawyers themselves do not find this image particularly attractive, so how are the general public expected to react?

The impact of insurance companies cannot be overlooked. An insurance company is in effect relying on the solicitor to assess the merits of the case at which point the insurance company decides whether or not to accept the risk of losing the case.

The danger is that individual cases will not be assessed by the insurance company on the grounds of their individual merits but instead on the grounds of the reputation of the solicitor for assessing the risks.

The requirement of the assessment of the risk presumes that this is possible on the first consultation with the client.

However, on many occasions the lawyer's initial risk analysis may be exposed as being too conservative but only after expending much unrecoverable time and money. Further, every lawyer is familiar with the case which may be potentially successful but which may not be won by virtue of the client's performance together with other external factors beyond the control of the lawyer.

In short, lawyers are not welcoming the introduction of CFAs. The underlying view is that they are simply a method of cost-cutting in that the expense which was previously borne by the government is now to be borne by lawyers. The relationship between lawyer and client is questioned. The honour and integrity of the profession is doubted. This most certainly is not what every lawyer wants.