Lord Chancellor's Department Proposals: September 2000
On 1 April 2000, the Government eased the rules on conditional fees, in pursuance of its policy of increasing access to justice by making it easier and more affordable to use conditional fee agreements and legal expenses insurance. These rules, implementing the Access to Justice Act 1999, only apply to single conditional fee agreements. The Government has now announced that it will extend the law so as to allow collective arrangements for conditional fees, which could be used by bulk providers and purchasers or users of legal services, such as trade unions or insurers.
Consultation on a possible scheme for collective agreements took place in July 2000. The Government has now published its conclusions following the consultation process in the document "Collective Conditional Fees" (Lord Chancellor's Department, September 2000). The resulting policy on collective conditional fees will allow economies of scale, reduce regulatory burdens on businesses and membership of organisations and further support its policy of enhancing competitiveness of providers of legal services. It is intended to provide a scheme which allows agreements to be made between bulk providers of legal services and bulk purchasers on behalf of themselves and others, so as to "increase avenues to the courts for thousands of citizens".
The Government proposes to introduce new regulations for collective conditional fee agreements through secondary legislation. It contemplates a scheme where there is a collective agreement which provides common terms for pursuing cases under the agreement, but which specifies individual success fees for those cases. Where a success fee is contracted for, a separate risk assessment will be drawn up for each individual case. There will be no limitation on who can provide or use collective conditional fee agreements. It is contemplated that such schemes will involve trade union members and members of mutual benefit organisations. The client will receive a copy of the risk assessment, but only if requested.
We responded to the July consultation paper that every client should automatically receive a copy of the risk assessment in his/her case, but the Government has decided otherwise. We have now written to the Lord Chancellor's Department suggesting that solicitors have an obligation to inform clients of the latter's right to request a copy of the risk assessment.
Indemnity principle and CFAs
Under the indemnity principle the loser should not have to pay more than the winner's actual liability pay to his/her lawyers. It has been argued that where the winner has a CFA or other "no win, no fee" arrangement, the loser has no liability whatsoever for the winner's costs.
The Government now proposes to abolish the indemnity principle when assessing costs, no matter how a case is funded. Section 31 of the Access to Justice Act 1999 will be brought into force to amend section 51 of the Supreme Court Act 1981 to this effect, and rules of court will provide that the receiving party can receive reasonable and proportionate costs, irrespective of the terms of agreement, in cases where an additional liability is claimed.
For further information please contact Chris Hodges by Tel on +44 (0)20 7367 3000 or by e-mail at chris.hodges@cms-cmck.com.
