Last July, in response to the Court of Appeal's decision in Thai Trading & Co (a firm) v Taylor (1998) 2 WLR 893, the Law Society's Council approved an amendment to practice rule 8, to allow solicitors to enter into contingency fee arrangements in contentious proceedings if they are permitted by statute or case law.

This amendment was approved by the Lord Chancellor and came into immediate force on 7 January 1998.

The pertinent question is now whether contingency fees are permitted by the common law - s.27 of the Access to Justice Bill proposes to give statutory effect to contingency fees by redrafting s.58 of the Courts and Legal Services Act 1990 but this is unlikely to become law until later this year.

Solicitors may not be surprised to find that there is not as yet a completely clear answer to this question.While the amendment to practice rule 8 was going through the approval procedure under sched 4 of the Courts and Legal Services Act 1990, the law was thrown into some confusion by the decision of the Divisional Court in Hughes v Kingston Upon Hull City Council, The Times 9 December 1998.

The court declined to follow Thai Trading, which permitted a solicitor to seek no more than ordinary profit costs in a winning case and less - but not necessarily nothing - if the case is lost, as the decision of the House of Lords in Swain v The Law Society (1983) 1 AC 598 had not been considered.

Swain held that the Solicitors Practice Rules are subordinate legislation.

Accordin gly, Hughes held that a contingency fee agreement could not be enforceable as the practice rules - at that time - prohibited solicitors from entering into such arrangements.

However, the lack of reference to Swain in Thai Trading is perhaps unsurprising, as Picton Jones v Arcadia Developments (1989) 03 EG 85 was cited, which is authority for the proposition that a breach of the professional rules does not of itself amount to an unlawful act.

This case was not cited in Hughes.

There is other case law on subordinate legislation, not cited in Hughes, which might justify a different conclusion from that reached by the Divisional Court.

Arguably, a breach of the rules may be relevant to disciplinary proceedings but would not provide a member of the public with a private law right of action.

Swain drew a clear distinction between private and public law in this area.

Therefore, it seems that Thai Trading remains good law.We await the outcome of a pending application for leave to appeal the Hughes decision.

An amendment to the Access to Justice Bill, to make it clear that Thai Trading-type agreements would not be unenforceable simply because they were signed before the Act, was rejected at committee stage in the House of Lords by the Lord Chancellor because it appeared to be retrospective legislation.

Some element of risk therefore remains if there are further developments in the common law during the next few months.THE NEW PRACTICE RULE 8 READS:'(1) A solicitor who is retained or employed to prosecute or defend any action, suit or other contentious proceeding shall not enter into any arrangement to receive a contingency fee in respect of that proceeding, save one permitted under statute or by the common law.(2) Paragraph (1) of this rule shall not apply to an arrangement in respect of an action, suit or other contentious proceeding in any country other than England and Wales to the extent that a local lawyer would be permitted to receive a contingency fee in respect of that proceeding.'