The case for contingency fees in England and Wales received another boost this week after research seen by the Gazette found that their use in employment tribunals throws up few major concerns.

The study – the first of its kind – said contingency fees in tribunals improve access to justice marginally, but need better regulation to protect clients over issues such as transparency of charging.

It comes on the heels of a report from the Civil Justice Council, which said contingency fees could work in England and Wales (see [2008] Gazette, 30 October, 1).

Both reports found evidence that lower-value or more risky cases are less likely to be brought under a contingency fee system. But Professor Richard Moorhead of Cardiff Law School – who co-authored both studies – said this highlighted the need to find other ways to resolve low-value disputes.

Contingency fees are allowed in tribunals because they are deemed non-contentious business, and Moorhead said he had conducted the study because of growing talk about ‘how terrible and American-like the system was becoming’. The conclusion, he said, was ‘that there’s nothing particularly to worry about, which is quite an important message for people who bang on about how bad contingency fees are’. He said the results would read across to general litigation ‘fairly well’ if costs-shifting was largely removed, as it has been in tribunals.

There was no evidence that contingency fees lead to an increase in spurious or weak tribunal claims, or that the percentage fees charged are generally excessive.

But inconsistent approaches to charging – such as whether VAT is added to the percentage fee – were likely to cause confusion, while there was some evidence that the pressure to settle inherent in contingency fees leads to cases being compromised inappropriately.