Appeal Court to rule on CFA flaw 'fishing'

The escalating battle over highly technical challenges to conditional fee agreements (CFAs) by defendant solicitors will soon come to a head, after a circuit judge ruled that defendants do not have an automatic right to see the CFA and 'fish' for flaws, but then passed the case on to the Court of Appeal.

The news came as the Law Society revealed that it is to intervene in two cases aimed at scuppering technical challenges to its model CFA.

In Worth v McKenna, the defendant - represented by City firm DLA - argued that it was necessary to see the CFA during the assessment of costs to ascertain whether the indemnity principle had been adhered to.

District Judge Wright backed this, saying the court was entitled to look at whether it complied with the CFA regulations as a matter of routine.

But Circuit Judge David Marshall Evans ruled that the CFA should not be disclosed unless there was evidence of non-compliance, and said questions over the indemnity principle could be answered by examining the certificate of the bill.

He suggested that requests for disclosure often constituted 'fishing expeditions' on the part of the defence.

'Such expeditions inevitably derive encouragement from the fact that the possible "catch" in the "fishing" is a very large one indeed - complete exemption for the paying party from paying the (apparent) receiving party any costs at all,' he said.

He gave leave for the defendant to appeal so the issues could be resolved.

Defendant solicitor Paul Dowle said: 'We think the judge recognised the force of our arguments, which is why he has directed the case to the Court of Appeal.'

A Law Society spokeswoman said: 'We very much agree with the judge that there is no public interest reason to allow losing parties to seek to evade responsibility for costs by searching for technical defects in CFA agreements.

We also agree that in modern circumstances, it is impossible to justify depriving solicitors of all their costs because of technical defects of that sort.'

But Tim Wallis, president of the Forum of Insurance Lawyers, said defendants needed all the facts to make legitimate challenges over costs.

'These cases underline the difficulties all parties are having with the new funding regime,' he said.

'Claimant solicitors cannot be confident that the agreements that they have signed comply with the tortuous regulations.

Defendant solicitors are obliged to raise the possibility of unenforceable agreements as a result.'

Mr Wallis joined Patrick Allen, president of the Association of Personal Injury Lawyers, in calling on the government to move fast to get rid of the indemnity principle.

But Mr Allen said: 'I think this decision is correct as we are finding it extremely difficult in practice because defence lawyers are demanding disclosure when there is no evidence of any wrongdoing.'

Law Society chief executive Janet Paraskeva revealed this week that the Society has decided to make rare interventions at circuit judge level in two cases where defendants have challenged the validity of CFAs on the grounds that the model agreements produced by the Society do not comply with the Conditional Fee Agreement Regulations of 1995 and 2000.

Writing in this week's Gazette, Ms Paraskeva said: 'The regulations were intended to protect the claimant client, frequently an injured and vulnerable person.

'But the alleged breaches in no way prejudiced the claimant.

In these circumstances, it would be particularly absurd for any technical breaches to provide a windfall bonus to the defendant.'

She said the Society would carry the interventions to the Court of Appeal if necessary.

Paula Rohan