Fees on way back down to earth
Speaking at the Association of Costs Lawyers’ annual conference last week, the master of the rolls Lord Neuberger expressed great confidence that a combination of the Jackson reforms, alternative business structures and client demand for fixed fees will mean that lawyer’s fees are almost certain to come down.
But for lawyers concerned that their high fee-income is about to begin a steady descent back down towards earth, he did point to a silver lining in one of the passing clouds. Cheaper litigation would mean more parties able to bring their case, and hence more litigation work, albeit paid at a lower rate; so perhaps litigators do not need to start selling the family silver just yet after all. Of course Justice minister Jonathan Djanogly might be surprised to see an increase in litigation listed as one of the benefits of his reforms, but then it all depends on your audience.
Neuberger shed some light on the key issues emerging in relation to damages-based agreements (DBAs, or contingency fees to use the old terminology). He warned that they must not be allowed to become ‘yet another blot on the landscape of civil justice’, and stressed that there must not be a repeat of the satellite litigation bonanza created by reforms to conditional fee agreements in 1999.
One issue highlighted by Neuberger was the potential for DBAs to create an improper incentive for solicitors to pursue claims in the small claims track, where there is no costs-shifting, in circumstances where a different claims track would actually be better for the client. This could become more of a problem if the small claims track limit is raised to £15,000 as government intends.
In personal injury, Neuberger noted that some lawyers question whether DBAs will ever take off, because a traditional CFA will still be more profitable for a solicitor. But the judge pointed out that clients may prefer a DBA if that works out as a better deal for them, in which case some lawyers will inevitably start offering DBAs to gain a competitive advantage over their rivals. DBAs will encourage innovation, he suggests.
What is heartening is to see that the senior judiciary, and no doubt the Civil Justice Council’s working party, are alive to the intricate issues thrown up by DBAs and determined to learn the lessons taught by the CFA costs wars. Neuberger also made one further point with which I suspect most lawyers would agree. He stressed the need for a special Costs Council, as proposed by Jackson, to be implemented.
It is hard to argue with the judge’s point that ‘one big push every 10 years or so to meet a crisis is neither a proper nor a sensible way to deal with the problem of litigation costs,’ adding, ‘It is not sufficient to sit back and let a system get progressively out of kilter and only act when continuing to do nothing ceases to be a realistic option’. Neuberger wants the council - which would be made up of costs lawyers, litigators and others on the frontline - to identify problems early, monitoring and tweaking the system as it goes along, and building up a macro picture of the effect the reforms are having.
Surely no one would dispute that this is a good idea; but it will cost money to implement. Let’s hope that Neuberger’s decision to highlight the need for a Costs Council is not a sign that its creation is in doubt.
Rachel Rothwell is editor of Litigation Funding magazine, providing in-depth coverage on costs and the financing of litigation.
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