Jason Rowley looks at the recent DCA report on simple CFAs, only to find a shift in client care requirements and an insurance stumbling block

A letter can be a long word in politics. The Department for Constitutional Affairs (DCA), in its document ‘Making simple CFAs a reality’ (published 29 June 2004), has decided to put irony, rather than iron, into the backbone of conditional fee agreements.


From the outset of recoverability of success fees, the defendants have argued that the claimant’s ‘costs-free environment’ left the claimant with no incentive to settle early. Now the DCA says that where the claimant is represented on a pro bono basis, the defendant has no incentive to settle early, since opposition costs cannot increase. Therefore, something must be done. Hollow laughter can be heard emanating from defendants’ camp.


In fact, using ‘CFA lite’ enables solicitors who are thinking of acting on a pro bono basis to use a CFA anyway. This paper confirms what all claimant practitioners have known for some time. There is precious little difference between acting on a CFA and pro bono anyway.


The DCA might have taken the view that the way to make the system work was to get solicitors to take their CFA obligations seriously. Instead, using the euphemism of ‘simplification’, solicitors’ obligations have not altered, they have just been written down in a different place. Cavalier solicitors now only breach the professional conduct rules and not the Draconian section 58 of the Courts and Legal Services Act 1990. The effect is that such breaches will not cause the CFA to fall under the defendants’ indemnity principle challenges. In other words, shoddy work can still be remunerative. Hardly an advert for the professional service solicitors who seek to distinguish themselves from the claims farmers.


Moving the client care requirements from the regulations into the conduct rules has, regrettably, little or no effect on the length (or simplicity) of CFAs. As long as there may be some situations where a solicitor may want to charge his client (for example, the claimant transferring to another firm), he has to have the lengthy explanation set out in the current CFA, or something very similar. Anyone bold enough to use a CFA lite could produce a short agreement. In most circumstances that advantage to the client will be more than outweighed by his uninsurability for after-the-event insurance cover (a problem too lengthy to be explained here). So CFA lite - even for pro bono cases - will be a problem if no insurance can be gathered.


If the indemnity principle were to be abolished, a good deal of the CFA obfuscation could be removed. The DCA report shows a change in emphasis. It is now possible to remove it apparently but something needs to replace it as a control on recoverable costs.


What happens currently? It is a combination of non-CFA clients who agree ‘real’ rates with their solicitors and the guideline hourly rates produced by the Supreme Court Costs Office. The word ‘guideline’ is another euphemism in many parts of the country because it is the figure that is always imposed. Where there is a rigid adherence to the rates, everyone knows where they stand.


Therefore, why not have fixed recoverable hourly rates in bands and leave the arguments to the correct grade of fee-earner? There is a dispute between the parties as to the correct level of rates, namely, are the current guideline rates appropriate? There is also the question of who should set the rates. These surely are matters on which negotiation of the ‘stakeholders’ with suitable academic research could arrive at figures that were acceptable to all. If the parties could not, the rates could be imposed with an automatic review mechanism. At a stroke the control problem by the judiciary would be cured.


Jason Rowley is former president of the Forum of Insurance Lawyers and managing partner of Kent-based Vizards Wyeth