PI lawyers welcome CFA rule changes

Personal injury solicitors have welcomed government moves to introduce a 'lighter and simpler' conditional fee agreement (CFA) regime geared towards bringing a truce in the costs war.

Lord Chancellor's Department minister Baroness Scotland told the Association of Personal Injury Lawyers (APIL) conference in Brighton last week that the department will put amended regulations in place on 2 June, enabling solicitors to abrogate the indemnity principle in CFAs and collective CFAs.

It will also consult shortly on new CFA regulations, with the aim of making further changes by early 2004.

The minister said she understood the legitimate reasons insurers had for trying to reduce the cost of claims, but questioned their approach in doing so through technical challenges.

'This new legislation will enable solicitors to enter into agreements with their clients in which they can plainly state that they will not seek to recover more than is allowed between the parties, subject to such an arrangement being drawn up in the CFA,' she explained, meaning firms will be able to guarantee to clients that they will receive all their damages.

The contract and consumer protection requirements will also be simplified.

The indemnity principle means that a solicitor cannot recover more than his own client is liable to pay, which rules out true 'no win, no fee' agreements.

Many solicitors are thought to have been long acting in breach of the principle.

APIL president David Marshall said the news would be a comfort to claimant solicitors, many of whom had almost been bankrupted by tussles over costs.

'The system must enable lawyers to take on meritorious cases and to be properly remunerated both for their work and for the risk of loss that they accept every time they run a "no win, no fee" case,' he said.

A Law Society spokesman said: 'We welcome the government's moves towards simplifying CFAs.

The government promoted conditional fees as a substitute for legal aid.

If they are to operate as intended - so that they enhance access to justice - lawyers need to be sure that they will be paid properly in successful cases and technical challenges without merit need to be eliminated.'

Jason Rowley, president of the Forum of Insurance Lawyers, commended the government's attempts to rectify the effects of its original 'ill-judged' legislation.

'The new regulations are welcome news for defendant practitioners using CFAs as well as for claimants, since solicitors will now be allowed to accept the amount of costs recovered from the other side as full payment,' he said.

Paula Rohan