These are worrying times for claimant solicitors with CFA cases. Decisions must be made, and the stakes could not be higher, argues Brett Dixon


Leave to appeal in last year's landmark conditional fee agreement (CFA) cases of Myatt and Garrett was refused by the House of Lords last month. The defendant insurers said they were not taking the compliance points highlighted in those cases - relating to the enquiries solicitors must make about pre-existing legal expenses insurance, and the interest solicitors must declare when recommending a claims management company's after-the-event insurance.



Whatever their position, anecdotal evidence is that defendants are routinely taking the points. Indeed, a well-known defendant practice openly states that its clients will not allow it to settle costs absent evidence of compliance with Myatt and Garrett.



We are told that there is a shelf-life to these challenges because of the new CFA regime that came into force in November 2005. However, thousands of cases pre-dating this remain in the system and will almost all be significant long-runners - there to be targeted by defendants with the prospect of worthwhile and increasing windfall savings on every one they manage to torpedo.



Do claimant solicitors running those cases dare to continue and incur further possibly irrecoverable costs? What do you do about your barrister on his CFA (where you warranted you had complied with the old regulations)? Do you enter the almost uncharted jungle of rectification, ratification and/or second CFAs? Or do you (indeed, can you) cut your losses by terminating your retainer and casting your client adrift? You need to make a very careful further risk assessment on every runner - and then back your gamble to the death because the stakes will be high. What price an early end to this litigation?



And, for heaven's sake, do not ask the Court of Appeal or House of Lords to help. With their blindfolds of justice firmly in place, the former could jump in any direction and the latter does not want to know.



Depressingly, there is little sign that post-November 2005 CFAs will fare any better now that the regime is governed by the Law Society practice rules rather than regulation. The amended Solicitors Costs Information and Client Care Code rather reflects the Myatt and Garrett rulings, and the Court of Appeal in Garbutt v Edwards [2005] EWCA 1206 said: 'Not every breach of the code will result in a breach of rule 15 [of the practice rules]. It has to be a serious breach of the code, alternatively there have to be persistent and material breaches.' Materiality is interpreted strictly; any breach is a material breach. It is reasonable to presume that we have not seen the end of the challenges to CFAs. Defendants need not even be original.



For those of a nervous disposition, this is the frightening part. It is not just your success fee you might lose. The first claimant solicitor who fails in his duty under the code is risking his right to practise as much as his profits, because a breach - especially a significant or repeated one - will be a disciplinary offence. If you use standard documents and procedures for CFAs, there is a risk of a persistent breach if you are found to have breached it once. What defendant insurance company - with a duty to their shareholders - would not run this argument or use it as leverage to reduce their costs liability?



The risk the claimant's solicitor is asked to run is that there will be no fee - win or lose - and possibly no job.



Brett Dixon is a personal injury solicitor and head of C2G - a division of Burnley and Kenilworth firm Smith Jones Solicitors - which acts for claimant solicitors in costs proceedings