Callery ruling boosts claimant solicitors

By Jeremy FlemingPersonal injury solicitors can sign up clients to conditional fee agreements at the outset and charge a 20% success fee in simple cases, the Court of Appeal has ruled in the Callery v Gray test case.However, insurer solicitors were more sceptical, calling for further mediation.The court ruled on three issues.

It said after-the-event (ATE) insurance could be taken out by firms at the outset of cases, without waiting to discover whether the insurer will dispute liability.Second, the court decided what a reasonable success fee ought to be.

It said solicitors should be allowed a maximum 20% success fee on a 'modest and straightforward road accident-style claim'.However, the court also said it should be open to the solicitor to agree a success fee of up to 100%, but if the case settles during the three-month personal injury protocol period, this fee should be reduced to something like 5%.It also confirmed its preliminary ruling that premiums are recoverable even when taken out pre-proceedings.The court deferred judgment on the reasonable level of premiums, instead ordering an inquiry by costs master John O'Hare.

It will make a supplemental judgment after he has reported.

Final submissions to Master O'Hare close this week.The judges said they 'did their best on sketchy data', and that 'it will be desirableto review our conclusion' once more data is available.David Marshall, Association of Personal Injury Lawyers treasurer, said: 'We are delighted the Court of Appeal has agreed with us that a solicitor and client can sign up a CFA with a reasonable success fee, and take out an ATE insurance policy.'He was more cautious about the two-stage success fee, saying: 'As yet, this is untested'.But the Forum of Insurance Lawyers, while welcoming the judgment as 'guidance', said: 'As further evidence becomes available, it will enable courts to reduce the figure from 20% in RTA cases to avoid over-compensating claimants.'FOIL also called for the Association of British Insurers/Law Society-sponsored mediation on recoverability to be restarted 'to resolve the outstanding issues in the light of their Lordships' judgment'.FOIL had recommended a reasonable success fee of 5%.A Law Society spokeswoman welcomed the finding as 'a sound basis for improving access to justice', but said: 'We have a concern that the judgment has left open some possibilities for continuing dispute.'