November 1997 was when the Lord Chancellor proclaimed the government's faith in conditional fees as the best method of funding most civil cases in place of legal aid.Two and a half years later, the reality will dawn as legal aid for personal injury cases is withdrawn and part II of the Access to Justice Act 1999 comes into force.
The government's announcement of its conclusions following consultation on success fee and premium recovery has at last put some flesh on the bones of section 27 of the Act.
Litigators should start preparing for recovery of the cost of risk from 1 April.The Law Society has argued strongly that the changes should be allowed to bed down before legal aid is withdrawn from personal injury cases and I am disappointed that the government has not seen fit to postpone that withdrawal.
We know that the rules of court will not be ready until May this year at the earliest, and it will take judges some time to become familiar with many of the issues to do with setting success fees, or assessing the reasonableness of insurance premiums.
And do not forget that the new arrangements apply to all civil cases not just personal injury actions.Much remains to be done by the civil procedure rules committee to draft the fine detail of the proposals.
Similarly, we await draft regulations to deal with issues such as the proposed requirement to specify in a conditional fee agreement the reasons for the setting of a particular success fee.
We must expect a temporary falling off of new cases, as the recovery provisions only apply where the first agreement was signed, or policy issued, after 1 April.One government conclusion is to allow all after-the-event insurance premiums to be recovered, not just those in conditional fee cases.
It would then be possible to recover premiums designed to cover own solicitor's costs on a normal paying basis, as well as disbursements and opponent's costs.Some insurance schemes include finance loans and substantial marketing expenditure wrapped up within the premium.
Surely, when the government says that it will not be permitted to recover from an opponent that part of the success fee which relates to the absence of funding for disbursements and work in progress (the 'financial subsidy' element), the true 'risk' element test for the recovery of the insurance premium should be the same.
The government proposes that the right to challenge is limited only to the ground that the premium is wholly unreasonable and generated excessive costs.Although the detailed rules will be all important, generally we can welcome most of the government conclusions as sensible: for example, a mechanism to resolve disputes about success fees where proceedings have not been commenced, without the need to issue a full claim.
It is also a relief that there is no suggestion that solicitors should behave like insurance brokers, researching all the market to give 'clear advice'.One curious provision is that where an opponent successfully challenges the level of a success fee, the decision is to be binding as between the solicitor and client, save in exceptional circumstances.
This is designed presumably to protect the uninformed individual client, but is unnecessary where sophisticated commercial clients are involved.A clear challenge for the rules committee will be to draft in plain English the complex idea that membership organisations such as trade unions can recover the notional costs of self insurance from a member's opponent, when they have given an indemnity as to costs.In its original support for conditional fees as the funding gap solution for middle income clients -- but not a substitute for legal aid -- the Law Society's main concern has always been to ensure that conditional fee arrangements remain attractive to both solicitors and their clients.
It is vital that the drafting of detailed rules and regulations to govern the revolutionary new world of funding civil cases by conditional fees produces a fair framework that will sit easily within Lord Woolf's culture of access to justice.