As the ruling in Callery v Gray si nks in, the parties have greeted the result with varying degrees of enthusiasm.The Association of Personal Injury Lawyers (APIL) welcomed the judgment, and seemed particularly pleased by the amount of attention paid to its submissions.APIL treasurer David Marshall, a partner at London firm Anthony Gold, said: 'We are delighted that the Court of Appeal has agreed with us that a solicitor and client can sign up a conditional fee agreement (CFA) with a reasonable success fee, and take out an after-the-event (ATE) insurance policy at a reasonable premium, at the outset.'While Mr Marshall welcomed the two methods for success fees outlined by the court (see box), he added that as the second method is as yet untested, 'so it is a bit early to welcome it unconditionally'.Over at the Forum for Insurance Lawyers (FOIL), there are fewer sounds of popping champagne corks.FOIL's official statement following the case stressed that it hopes that in time it would be able to persuade courts to drop the 20% maximum success fee level accepted by the court to a smaller figure, 'in order to avoid over-compensating claimants' solicitors'.Noting that premiums are now recoverable when taken out at the beginning of cases, FOIL continued: 'The court has taken this decision on the basis that premiums will be kept at a low level as a result.'It sounds a bit like grudging acknowledgment of defeat.Despite this Beachcroft Wansbroughs -- the City firm that acted for the defendant in the case -- seemed to remain upbeat.
It welcomed the decision saying: 'This will inject sanity into the claims environment and force claimants solicitors to be more realistic in their demands.'This will speed up the settlement of road accident claims, which will be good news for the insurance industry.'Another firm celebrating the result was Manchester and London practice Rowe Cohen.
Partner Anthony Dennison, who acted for the after-the-event insurers, said: 'Although the success fee was reduced [originally the claimant's solicitors asked for a success fee of 40%], the court gave a clear endorsement of the government's access to justice programme.
Solicitors will now be more inclined to accept riskier cases rather than "cherry-picking" the lucrative ones.'A Law Society spokeswoman said: 'The Law Society, generally speaking, welcomes the finding.
We know, however, that there are many areas still to be decided, but we are very pleased that -- in coming to its conclusions -- the court acknowledged the reliance it placed on our counsel, Richard Drabble QC, in coming to its conclusion that premiums should be recoverable.'The Society 'notes with interest' the two mechanisms for CFAs, she added, saying: 'Generally speaking, those two [methods of success fee] would tend to balance the interests of all of the parties and create a sound basis for improving access to justice.'According to barrister Gordon Wignall, the author of the Society's practical guide to CFAs, the ruling is good news for claimant lawyers.
Mr Wignall says the case has cleared up uncertainty among many claimant solicitors as to whether work done during the grey area at the beginning of an action -- when the solicitor has accepted the case, but before he has actually gauged exactly what the risk is -- is recoverable.Rumblings are already afoot about the draft report of costs master John O'Hare, and FOIL does not seem to be happy about that either.'It is a complete waste of time,' Jason Rowley, chairman of FOIL's costs special interest group, says, adding that master O'Hare's position is broadly that 'premiums are to be considered basically reasonable', and the onus will be placed on defendants to show they are not.Mr Rowley says this leaves two options for the way forward: 'Either the rate of what is reasonable will now be decided by common law through a patchwork of district judge cases, or the Law Society and Association of British Insurers' joint sponsored mediation should be reopened to examine the issue.'Mr Rowley says the draft shows the costs master is looking in detail at what a premium should reasonably be composed of.
This, he says, will be bad news for those claims management companies which set premiums at the higher levels, such as Claims Direct.One referral service that greeted the Callery decision with enthusiasm is Accident Line.
The court's reference in its judgment to the evidence it received from Chris Ward, managing director of Abbey Legal Protection, which runs the scheme, indicates that he helped swing the argument in favour of the recoverability decision.However, David Hartley, director of Accident Line, probably best sums up the feelings of most people involved in this protracted case: 'This case has largely been fought between the lawyers and the insurance companies.
It is now time to recognise consumers' interests.'THE DECISION IN CALLERY V GRAY ESTABLISHED THAT:-- Premiums payable in personal injury cases are in principle recoverable, whether they are taken out before or after the issue of proceedings;-- A solicitor may charge a reasonable success fee on a case.
For a modest road traffic accident and similar cases, the maximum should be 20%, and;-- In cases where there is more risk, a solicitor may take a higher uplift, say 100%, but this should be counterbalanced by a discount -- in the case of a 100% success fee, the drop should be to 5% -- if the case settles before proceedings.Still to come is the determination of the level of reasonable premiums, and the issue of whether the part of the premium which covers a claimant's own costs should be payable by a losing defendant.A draft report on the level of premiums has been circulated by costs master John O'Hare, and -- pending any further changes -- will be presented to the judges imminently.If that happens this week, the judges might be able to keep to the original intended timetable, and come to a full conclusion before the end of July, when the judicial term ends.