The Court of Appeal this week criticised both lawyers and the conditional fee agreement (CFA) system for allowing bad cases to reach the courts.


In an unusual 'annex' to the ruling in Rogers v Merthyr Tydfil, a test case that supported the way after-the-event (ATE) insurance operates, Lady Justice Smith said she was concerned by figures from ATE insurer DAS that 70% of the slipping and tripping cases it backs to trial go on to fail.



'Legal advisers are being insufficiently robust in the advice they give at the late stage when a decision has to be taken whether to abandon the case or go to trial,' she declared.



The judge, with the support of Lords Justice Brooke and Laws, said the figures indicated that neither the CFA system nor ATE process provides enough incentive for solicitors to undertake the kind of close examination of the merits of a case that a privately paying client would demand before allowing it to proceed to trial.



She explained: 'At present, the insured claimant can notionally pay the high premium which reflects his poor chances of success, secure in the knowledge that, if he wins, the premium will be recovered and, if he loses, he can walk away unscathed. I find it hard to believe that Parliament intended that claimants should be in so much better a position than a private litigant.'

The result, Lady Justice Smith said, is the system being more expensive than it should be, which would eventually be felt by the premium-paying public.



Solicitors reacted with surprise to the claims. A statement from the Association of Personal Injury Lawyers said: 'It is not the experience of our members that too many weak cases are being taken to trial and lost. Most cases settle or are abandoned at an early stage, so it is only a tiny proportion that ever reach trial.'



Funding to take cases to trial is essential, it added, so as to prevent defendants prolonging cases in the hope of wearing down a claimant.



A Law Society spokesman said: 'Solicitors do not get paid when a case taken on a CFA is lost. We think this provides ample incentive to ensure that doomed cases are not pursued.'



The Civil Justice Council has been trying to take the heat out of ATE disputes, and the Gazette understands that it has begun a mediation process that aims to agree ATE premiums for smaller cases.



In the substantive case, the appeal court said a premium's proportionality should not be linked to damages; so long as it was necessary to incur the premium, 'it should be judged a proportionate expense'. The court backed the use of staged premiums, and solicitors selecting an insurer as their preferred sole provider.



DAS's solicitor, Howard Colman, a partner at London firm Colman Coyle, said: 'In essence, the court has accepted that if a solicitor acts reasonably in selecting a reputable ATE insurer for his clients generally, that will usually be sufficient to enable recovery of the premium.'



Neil Rose