CFA ruling eases costs war

TECHNICAL CHALLENGES: courts must decide whether breach has a 'materially adverse affect'

Personal injury solicitors have hailed last week's Appeal Court ruling as a further step towards peace in the costs war after it decided that technical breaches of conditional fee agreement (CFA) regulations will only render them unenforceable where they materially affect the client or the interests of justice.

In its long-awaited ruling on six appeals relating to technical challenges to CFAs, the Court of Appeal complained that 'bitter trench warfare' over enforceability had hindered access to justice, and called on judges to remember that 'the law does not care about the very little things'.

It said CFAs should be disclosed to the paying party in costs proceedings as a matter of course, although the judge can order that certain privileged information is excised.

It urged the courts to prevent further satellite litigation by looking at whether any breaches of the CFA regulations had a 'materially adverse effect, either upon the protection afforded to the client or upon the proper administration of justice'.

The court also ruled that it is permissible for solicitors working under The Accident Group scheme to delegate responsibility to a representative, although it added that this must operate under a framework for reporting, accountability and supervision by the solicitor.

The Law Society had intervened in the cases following concerns that solicitors would start turning down personal injury work unless the whole system was clarified.

'This ruling provides a simple, practical test to see whether an agreement is workable,' President Carolyn Kirby said.

'We believe the judgment will now enable the CFA scheme to be workable.

It will preserve access to justice and it will give solicitors confidence that they will get paid for recovering damages for personal injury victims.'

David Marshall, president of the Association of Personal Injury Lawyers, said claimant solicitors would be happier handing over their CFAs to defendant firms now that the threat of technical challenges had been lifted.

'The Appeal Court judges are clearly fed up with the way insurers have tried to thwart the government's intention of increasing access to justice by challenging every uncrossed "T" and undotted "I", 'he argued.

Claire McKinney, vice-president of the Forum of Insurance Lawyers, said the ruling should go some way to cooling down the 'overheated' costs debate.

'Where claimants have used the Law Society model or something very similar, there ought to be few, if any, further problems,' she said.

'If solicitors have drafted their own agreements, their acceptability will depend on their capacity to have followed the regulations properly.'

Paula Rohan