The availability of conditional fee agreements (CFA) for professional negligence cases arising out of a personal injury action has been the subject of uncertainty.

The Bar Council has advised barristers that CFA's are not available because a professional negligence action is one for loss of a chance, not a personal injury action.

The Law Society and the Lord Chancellor's Department (LCD) believe that such professional negligence cases are within the permitted scope of conditional fees.A personal injury action is defined in RSC ord 1, r 4.

In Paterson v Chadwick [1974] 2 All ER 772, it was held that an action against a former solicitor for breach of duty to prosecute a claim for personal injury is an action for personal injuries, although the cause of action lies in contract.

The Bar Council, however, says that the action is for loss of a chance.The Law Society has pressed the LCD to make the position clear in amendments to the Conditional Fee Agreements Order 1995.

It is the Society's view that professional negligence proceedings arising out of a personal injury action should, as a matter of policy, be within the permitted scope.

It is unlikely that any steps will be taken by the Lord Chancellor prior to a general election.Barristers will not accept instructions on a conditional fee basis in these cases in the light of the Bar Council's advice.

They are likely to advise that any conditional fee agreement entered into by the client may be invalid.

Prospective clients should be advised of this before signing a CFA.

Practitioners will wish to consider what option to offer in respect of payment of counsel's fees.

If the solicitor is willing to take the risk and to pay counsel's fees in any event, an additional success fee may be justified.

The total of all success fees must not exceed 100%.Accident Line Protect insurance covers professional negligence cases arising out of personal injury actions.

Prospective clients will wish to know whether insurance cover is available.

If the negligence action is lost, but insurance cover is in place, the defendant will receive payment of costs and is unlikely to challenge the validity of the CFA.

This is likely to be a better protection for a defendant firm and their professional indemnity insurers than if the client was legally aided or uninsured.If it is proposed to enter into a CFA without after-the-event insurance, and the case is lost, the client will usually be ordered to pay the costs.

If the client is unlikely to be able to meet the costs order, there may be an application by the opponent for an order that the solicitor should pay the costs on the basis of being either a maintainer of the action or for wasted costs.Acting for a client who the solicitor knows is unable to afford to pay costs does not create a liability to pay the opponent's costs (see Tolstoy v Aldington [1996] 2 All ER 566.

There are complex arguments about whether a solicitor would be an unlawful maintainer in these circumstances and any practitioner faced with a challenge on this basis is invited to seek further advice from the Society.

In the Society's view, a wasted costs order would be inappropriate.

Where the LCD and the Society believes that it is permissible to enter into a CFA, can it be negligent, unreasonable or improper so to do? The point has not yet been tested.In a winning case, there may be more prosp ect of a challenge to the validity of the agreement if the opponent is aware of the existence of a CFA.

The unsuccessful opponent could argue that the CFA was an unlawful contingency fee arrangement and that, by operation of the public policy bar against contingency fees and the indemnity principle of costs recovery, there would be no costs liability.

If this point were to arise, it would have a significant public policy element.

Practitioners are urged to seek further advice from the Society if the validity of their agreement is challenged in this way.A client might challenge the validity of the agreement on the grounds that it was an unlawful contingency fee agreement and, therefore, unenforcable.

It is not clear whether this would still entitle the solicitor to charge on a quantum meruit basis to recover their 'basic costs'.The Society suggests that practitioners are likely to want to advise their clients in the following terms before signing a conditional fee agreement for proceedings for professional negligence arising out of the conduct of a personal injury action:-- that solicitors may offer CFA's for this type of work;-- that Accident Line Protect insurance is available to cover the opponent's costs and the client's own disbursements, but only through firms offering Accident Line Protect insurance;-- if the services of a barrister are required, it is unlikely that a barrister will accept instructions on a conditional fee basis;-- arrangements for the financing of any barrister's fees should be discussed and dealt with appropriately in the CFA;-- if the case is successful, the opponent may raise a point of law to avoid responsibility for payment of costs if they become aware of the existence of a CFA; and-- the solicitor will not disclose any information to the opponents about the existence of a CFA without the express permission of the client.