Long shadow cast over fixed fees

David Marshall takes a sceptical stance on fixed costs and claims that APIL will not support a scheme until the indemnity principle is abolished

From the start, the Association of Personal Injury Lawyers (APIL) has been sceptical about the drive for fixed costs and the 'big tent' process.

Other than assertions from insurers, there has been no evidence adduced of a problem with base costs.

Conclusions from the research on this issue are not yet available.

The short timescales will inevitably mean that the research will be very 'top-line'.

While APIL has encouraged its members to assist, claimant firms - which do not have the resources of giant insurance companies - will find it difficult to extract and submit meaningful data in time.

APIL's main concern is that any fixed cost system for the claimant is obviously open to abuse by the defendant.

The onus of proof for every aspect of the claim lies squarely on the claimant.

Under a fixed cost system, the defendant can refuse to compromise any aspect of the case and drag matters out until the claimant's budget evaporates.

It is a simple way for defendants to ensure that claimants (or their lawyers) under-settle claims, leading to savings for liability insurers in damages.

However, we have engaged in debate and have proposed a pragmatic solution for the pre-issue costs of the simplest and smallest road traffic accident claims which constitute a large volume of cases and which are causing the most problems.

Lord Hoffman noted in Callery v Gray that these are cases where it should be possible to agree what actions should be required and when and how much they should cost.

And there is limited potential for case-by-case variation.

APIL takes the view that there may be some truth in this for the pre-issue stage of such cases.

So, provided that we can agree the detail, a fair figure and subject to getting rid of the indemnity principle, APIL will support an opt-in, pre-issue 'fixed cost' scheme for such cases with a mandatory review of how it is working after a couple of years.

But that is as far as we are prepared to go.

There have been no discussions on figures.

However, we have already been talking outside the 'big tent' to liability insurers about the far more important issue of success fees.

We have certainly had a very constructive debate and we will be disappointed if progress cannot be made on both guideline success fees and on the amount of any pre-issue fixed costs.

However, a pre-condition for any scheme is getting rid of the indemnity principle for all CFA cases.

We were pleased to hear the comments of the Master of the Rolls on this subject at the APIL conference.

Formal 'abolition' of the indemnity principle appears to be a non-starter because of the impossibility of finding time for primary legislation.

But if changes to regulations, court rules and solicitors' practice rules are the way around this, then these changes need to ensure two things.

Firstly, they must allow simple, transparent 'no win, no fee - win, no deductions from damages' CFAs.

This is important and was what we asked for in April 2000.

Secondly, the current problem is the way in which liability insurers can stand in the shoes of our clients, take points that our clients would never wish to take and get windfall savings in paying costs in cases they have lost.

So the regulation and rule changes must also prevent liability insurers taking advantage of the indemnity principle in this way.

It is two years since the government said the indemnity principle should go, and a year since the last costs forum agreed.

It is absurd that it is still casting its shadow over this debate.

APIL will not agree to any fixed costs scheme unless the indemnity principle effectively goes for CFA cases.

David Marshall is the vice-president of the Association of Personal Injury Lawyers and a partner at London-based law firm Anthony Gold