The use of conditional fee agreements to recover costs in pro bono cases is a vexed issue. Diana Bentley asks whether a government-proposed solution is incompatible with such work


Charitable work may be undertaken by professionals with the best and most laudable of intentions, but in some cases unwelcome complications may result.


The problem of the recovery of costs in cases where lawyers act on a pro bono basis has been a thorny one for a long time. ‘Lawyers acting pro bono haven’t been able to recover any costs due to the indemnity principle,’ explains Michael Napier, the former Law Society President and a member of the Attorney-General’s pro bono co-ordinating committee.



‘That has meant that plaintiffs or defendants have got an unjustified windfall when they’ve been unsuccessful against litigants who were represented by their lawyers on a pro bono basis as they’ve only had to pay damages and not costs.’


Not only do litigants facing those represented by lawyers on a pro bono basis find themselves generally better off than those facing paying opponents, but they can run up larger costs and delay cases knowing that there will be no cost penalty for doing so.


‘Sometimes if you’re acting pro bono the other side run up costs and delay the case knowing that they’ll get off scot-free,’ adds Julie Dickins, the partner in charge of pro bono work at Mayer, Brown, Rowe & Maw.


This undesirable imbalance has always existed but it seems that the seeds of potential reform were sown in 1999, when the Access to Justice Act and an amendment to the Civil Procedure Rules abrogated the effect of the indemnity principle in conditional fee agreements (CFAs).


In June 2003, CFA amendment regulations introduced the concept of ‘CFA lite’ – a softer regulatory regime for some CFAs, which provided for the first time the possibility of using a CFA agreement to recover costs in pro bono cases. However, no model CFA-lite agreement was drafted.


Now the possible use of CFAs as a vehicle for the recovery of costs in pro bono cases has been put on record in the proposals to reform no-win, no-fee arrangements published on 28 June by civil justice minister, David Lammy.



The consultation paper – called ‘Making simple CFAs a reality’ (see [2004] Gazette, 1 July, 3) – outlines proposals to make CFAs simpler and more transparent and to deliver a better deal for solicitors, clients and defendants.



But included in the consultation paper are comments on some other related issues including the potential use of CFAs in cases run on a pro bono basis.


‘The idea has been to create a platform to allow solicitors acting pro bono to recover costs but not pay them into the firm but pay them to a referring agency, which would normally be a charity, so that the lawyer is still acting pro bono and the ethics of the system are preserved,’ explains Mr Napier.


‘The idea was floated a few years ago and the Attorney-General’s pro bono co-ordinating committee has been looking at it and it has been discussed in various other places including the Department for Constitutional Affairs (DCA).’


The thinking on the issue is still in quite an embryonic stage, he says, and the costs sub-committee of the Attorney-General’s department now needs to look at how the CFA model agreement can be modified to be used by lawyers acting on a pro bono basis.


‘It’s quite a complex matter,’ he adds, but he is clearly positive about the idea that a way forward for addressing the problem of costs in pro bono matters may be within sight.


Pro bono organisations will be watching closely and some may still see the potential grouping together of CFA and pro bono work as unlikely.


‘They’re still very different beasts,’ comments Sue Bucknall, chief executive of the Solicitor’s Pro Bono Group (SPBG) – an independent charity that helps some 20,000 people a year to obtain representation on a pro bono basis.


‘CFAs and pro bono work don’t need to be linked together. We believe pro bono work should be available for all. CFAs were introduced to allow lawyers to make a profit. They’re very different arrangements from pro bono work, which we believe is part of a solicitor’s professional ethical life.’


Pro bono work, argues Ms Bucknall, should be available to those who cannot pay their own costs, cannot get public funding for their cases and cannot get a CFA.


‘Those who can get CFAs are not being represented on a pro bono basis even if the lawyers do not recoup any costs for themselves and take only part of the damages,’ she says.


Paddington Law Centre: costs recovered in pro bono cases could be ploughed into a war chest In the early days of CFAs there were some firms who wished to call their CFA cases pro bono work, she says, adding: ‘It exposed a difference of opinion about what actually constitutes pro bono work.’

The SPBG then proposed to the DCA and others a system whereby a judge could award costs against a litigant facing a party represented on a pro bono basis but on the condition that they be paid into a central pool that would aid all pro bono organisations. Such a stand-alone system would surely necessitate the abrogation of the indemnity principle, specifically in relation to pro bono work. So why can’t this be done?


‘The existence of the indemnity principle is a natural stumbling block,’ notes a spokesman for the DCA. ‘It was abrogated in the case of CFAs by primary legislation but there is still some debate as to whether or not primary legislation is actually needed to abolish the principle. And consideration may also be given to whether the indemnity principle should be abolished altogether or just in relation to pro bono work.’ The natural delays in such considerations, he says, have caused those involved in the pro bono issue to be more creative.


At this early stage it is unclear whether any costs recovered in pro bono cases would be paid to the relevant pro bono referring agency or into a central trust. ‘I see a central pool as the only fair way of administering this – otherwise people could cherry-pick the sort of charities which should benefit,’ says Ms Bucknall.


Overall, though, some organisations involved in the discussions are hopeful about the benefits of a new regime. For example, a Law Society spokesman says: ‘This is a way of being able to build up a war chest to help with the expansion of pro bono work, though admittedly there are lots of possibilities and the matter will need a lot of work.’ The SPBG and other pro bono organisations will undoubtedly be watching developments closely and making their own submissions to government.


‘Pro bono purists may believe that the use of a CFA and the scheme are not consistent,’ says Mr Napier. ‘But I believe it can stand up to examination and be a good starting point for further reform for the recovery of costs in pro bono matters.’


The DCA also admits to some uneasiness about linking CFAs and pro bono matters, but a spokesman says: ‘Once you get past that, the use of a special form of CFA could help level the playing field on costs and help raise money for pro bono charities, which would be a good thing.’


Some pro bono practitioners are positive about the proposed scheme even given that it may be an interim measure: ‘Using a modified CFA agreement to recover costs would be a welcome means of safeguarding against litigants who run up costs unnecessarily and ploughing money back into the pro bono effort. And it would be good to have an open debate about where the funds should go,’ says Ms Dickins.


LINKS: www.probonouk.net www.dca.gov.uk/consult/confr.htm to view the consultation paper



Diana Bentley is a freelance journalist