Costs law

New conditional fee agreement (CFA) rulesSection 27 of the Access to Justice Act came into force on 1 April, inserting a replacement s.58 in the Courts and Legal Services Act 1990.

This had the effect of making unlawful any agreement for contentious business with a solicitor or barrister which provides that his fees or any part of them are payable only in specified circumstances, except such agreements as comply with the strict requirements of the act.

Whatever the House of Lords may decide on the appeal from Awwad v Geraghty [2000] 1 All ER 608 will be irrelevant save in respect of events before 1 April.The principal changes are to make success fees recoverable from the paying party and similarly to make the premium for any insurance policy against costs liability recoverable.There is a new CFA Order (SI 2000/823) and new CFA Regulations (SI 2000/692), to accompany the new section.

The necessary changes to the civil procedure rules are in hand, but not published at the date of writing.CFAs are available in all types of proceedings except family and criminal (though they are lawful in statutory nuisance prosecutions).

The new section distinguishes between CFAs which provide for a success fee and the Thai Trading type of CFA, which does not.

Success fees will be allowed in all cases except statutory nuisance prosecutions.

But, contrary to the indications of the government's response to its consultation on the subject, the 100% limit on success fees is to be maintained in all types of case, including commercial and technology and construction court cases.The new CFA Regulations follow the 1995 version but the main new area lies in the prescribed requirements for success-fee CFAs.

The agreement must specify brief reasons for setting the level of success fee and isolate any element which is due simply to the solicitor or barrister's inability to bill before the end of the case (this element of the success fee being irrecoverable inter partes).

The agreement must provide that unless the court orders otherwise, if the recoverable success fee is reduced inter partes the reduction will apply equally between solicitor and client.

The most important other change concerns trade unions and similar bodies.

Where the legal representative is a body which has undertaken under s.30 Access to Justice Act to meet the costs liabilities of its members or other persons, it does not have to give the client the standard CFA explanations and advice laid down by the regulations unless the client may become liable personally to pay costs.

Legal expenses insuranceAs indicated above, s.29 of the act, which enables premiums for legal expenses insurance to be recovered inter partes, came into force on 1 April.

S.29 covers both insurance against inter partes costs liabilities and insurance against solicitor and client costs.

It can be used both as an adjunct and as an alternative to a CFA.

The other relevant section is s.30 which governs the situation where a prescribed body has entered into a written arrangement to meet the inter partes costs liabilities of a member of the body or other person (in effect acting as insurer of the risk).

This is intended to catch schemes where the beneficiaries are members of the body and their families.

The Access to Justice (Membership Organisation) Regulations 2000 (SI 2000/693) govern s.30 arrangements.

In such cases inter partes costs will include an element in respect of body's provision against the costs risk, but the recoverable amount cannot exceed the amount which it would have cost to obtain insurance in the marketplace.

S.30 'insurance' only covers inter partes costs liabilities: accordingly it is not an alternative to a CFA.Property not recovered or preserved on compromise of proceedingsIn Morgan and others v Legal Aid Board [2000] NLJ 583, Neuberger J considered the extent to which property received as a result of the compromise of court proceedings could be subject to the statutory charge as property which is the subject of a compromise of proceedings (Legal Aid Act 1988 s.16(7)).

In Morgan, farmers owed money to a bank, which was charged on their land.

Subsequently there was litigation between the bank and the farmers which was compromised by the land, which had not been in issue in the litigation, being released from the charges.

If in issue, property is subject to the charge.

If not in issue can it be said to be recovered or preserved by being substituted in some way for rights, claims or property which were in issue.

Here release of the charge was a by-product of the settlement; and in those circumstances the charge could not arise.

By contrast in Van Hoorn v Law Society [1985] QB 106, [1984] FLR 203, Balcombe J, Mrs Van Hoorn received on property in substitution for another which was in issue.

The charge was held to apply.

Access to Justice Act 1999 s.10(7) makes similar provision for attaching the statutory charge as does s.16(7).

Civil litigation miscellanyA pot-pourri of civil litigation cases, with family law undertones, appeared in The Times, 4 April.

A without prejudice offer in correspondence which is accepted is a contract: the correspondence ceases to be privileged.

If the offeree accepted the offer but asked for 'indulgence', such as for time to pay, then, provided that the acceptance was otherwise unconditional, there was an agreement.

So held the Court of Appeal in Society of Lloyds v Twinn and another.

This case may be of relevance on the construction of an agreement following Calderbank correspondence.All-in-One Design and Build Ltd v Motcomb Estates Ltd held that the rules had power to provide for interest on a Civil Procedure Rules 1998 r.36.21 offer.

Rule 36.21 is in similar terms to the dreaded new - from 6 June - Family Proceedings Rules 1991 r.2.69C.

Interest on an offer is all right; but what about interest on a lump sum under r.2.69C? All-in-One holds that interest under Supreme Court Act 1981 s.35A gives the court power to compensate a claimant for being kept out of his money.

Rule 36.21 is additional to that.

Matrimonial Causes Act 1973 s.23(6) (interest on a lump sum) is more restrictive.

Will the All-in-One approach apply to interest under r.2.29C; or can that be said to be ultra vires?And in Fryer v Pearson and another the Court of Appeal admonished a barrister for speaking of res ipsa loquitur (the thing speaks for itself) - a term not readily comprehensible to those for whose benefit it existed.

Fee hike: ancillary relief affected Most commercially minded people, faced with a drop in customers, reduce their prices.

Not so the Lord Chancellor.

Faced with a drop in issue of process and to meet his budget the head of our judiciary raises fees, thereby, perhaps, reducing further access to justice; and perhaps to guarantee a further hike next year.

Perhaps he could take on an economist - or a shopkeeper - to train him in the ways of attracting business.

Or he could go back to the days (before his predecessor) when justice was a service rather than a government-sponsored trade.For the family lawyer, the change to watch is that an application for ancillary relief increased to 80 from 25 April 2000; and there are eased fees on detailed assessment.

by Jeremy Morgan, barrister, 39 Essex St, London