THE introduction of conditional fees is centred, at present, on personal injury work, and offers a new route to litigation rather than a completely alternative system.

The immediate management decision to be made is whether to be involved in this new area at all.

In the short term, legal aid, legal expenses insurance and that increasingly rare bird, the privately funded client, will continue to be available.

As such it may well be possible to hang back for a little while and consider the development of conditional fee litigation.However, within the foreseeable future, if the assumptions made in the first part of this article (see [1995] Gazette, 31 August, 20) are correct, it will not be possible for a practice committed to personal injury work to opt out of conditional fee litigation.

So, the decision is whether to be an early entrant into this market place, even though it means experiencing the difficulties that innovators often have, in order to be in a better position to exploit an expanding market.

This 'luxury' of choice that is available to plaintiff lawyers will not be available to defendant lawyers.

They must immediately get to grips with the prospect of a rising proportion of the cases they deal with being brought by plaintiffs on a conditional fee basis and the implications this will have for their tactics.

If your decision is to become involved then it almost inevitably follows that you will have to become a member of Accident Line Protect? because of the insurance implications.

Full blown contingency fee arrangements have been available in Scotland for some time and yet have been relatively little used.

The reason is simple: the absence of 'after the event insurance'.

In Scotland, as in England, the 'loser pays' rule applies and this represents a substantial inhibition to prospective plaintiffs.

Not having to pay one's own lawyers is a mercy but that is much reduced by the uncertain prospect of having to pay your opponent's lawyer's bill.

The ability to be able to insure against such a risk, at a modest fee, is crucial to the success of conditional fees.

Whilst, there are other insurance providers, in competition to Accident Line Protect, it seems inevitable that their premiums will be higher because the risk will be assessed on a case by case basis, rather than by pooling the risk across a great number of cases conducted by recognised specialists.

(This may still represent a considerable bargain for particular types of cases, for instance medical negligence, where Accident Line Protect will not be immediately available and the comparison is with privately funding a case and assuming the potential responsibility for all the defendant's costs.)This analysis suggests that while it will be possible to resist involvement in conditional fee litigation and yet retain a personal injury practice, the prospects of growth of such a practice will be restricted to the rump of legal aid clients and the more speculative possibilities of growth in the legal expenses insurance market.The shape of delivery of conditional fee litigation will look quite different to the present model.

Existing litigation departments can generally be viewed as service organisations and, indeed, some litigation organisations present a service w hich appears to be the model of a nightmare London taxi drive.

The client climbs in, informs the solicitor that he or she wishes to proceed towards trial or settlement and the journey continues in a meandering fashion before arriving at the destination.

The professionalism of solicitors and the requirements of the taxing officer ensure that this is far from the norm.

But the nature of payment for litigation ensures that the overwhelming requirement is not the economic use of the solicitors' resources.

In many cases a lawyer will obtain much greater profitability, in the short term, from dragging out a case.

The rationale of an organisation which sets its stall out do to conditional fee litigation will be entirely different: it will be a project management organisation.

There will be a simple aim and objective: only cases with a reasonable chance of success are taken on.

That chance of success is carefully calculated and the aim is now different; not the engagement of the resources of the department on an hourly paid basis but the success of the client's case by the most effective and cost efficient route possible.

The nature of the project is now a joint venture between the solicitor and the client rather than the servicing function.In a direct way, failure to complete the project successfully (by winning a case at trial or by settlement) means that the litigation department fails to earn any money and failure to complete the project quickly means the practice is out of its money for longer than need be.

(Of course, the speed of litigation is not entirely in the hands of the plaintiff's solicitor; the defendant solicitor may not co-operate and the court may not assist: plaintiffs' solicitors should now protect their own interests by being in the vanguard of court reform.) Personal injury litigation on a conditional fee basis will be like the construction of a large civil engineering project.

The project requires a decision as to whether or not a case will be taken on and the involvement of 'sub-contractors' to assist in the bringing forward of the project to success.

These sub-contractors will include experts and, where appropriate, barristers.

The novel aspect of conditional fee litigation is that, for the first time, lawyers active in this area will be paid entirely by results with an all or nothing, no win, no fee payment.

This implies enormous changes in the approach which must be adopted by litigators in considering cases at an early stage.

In particular, it must be necessary to involve at, or immediately after, the first interview a theory of the case which concisely establishes the legal argument which must be sustained in order to succeed and the facts in their evidential context which are required to be proved in order to be able to get on with the law.

In the service model of litigation, individual fee-earners work within departmental guidelines and under supervision to produce a quality 'product'.

This approach will not be sufficient to resolve the difficulties inherent in the management of conditional fees.

The joint venture aspect of conditional fees implies a decision-making model and a management style more appropriate to capital investment by the practice, for example, the purchase of a new computer system.

The issues now become:-- Are you prepared to allow a fee-earner to build up a substantial conditional fee caseload by making his or her own decisions, when the result is the aggregate investment of time and money by the practice equivalent to buying a new computer system?-- Are you prepared to allow a fee-earner to take on a single case which would be the equivalent of buying that computer system?The answer must be that a degree of centralisation of the investment decision to enter the conditional fee joint venture is inevitable and the conditional fee risk manager must control the whole practice environment of conditional fees including decisions on pricing policy, use of IT and decision-making models, the monitoring of fee-earners and the caseload itself.