Threat of tiny success fees and large conflict problems trouble litigators

The government has stepped in to calm fears after it emerged at the conference that judges are being advised to limit solicitors' success fees in simple personal injury cases to just 5% to10%.Suzanne Burn, a deputy district judge and consultant to Irwin Mitchell, told a session on litigation funding that the new judges bench book suggested the level; however, in Callery v Gray, the Court of Appeal decided that a success fee of 20% was appropriate in a straightforward road traffic accident.The Lord Chancellor's Department said this week that the book had been compiled before Callery and would be updated by the Judicial Studies Board in due course.Ms Burn revealed that the bench book also suggests that: claimant solicitors should finance investigation of liability, rather than the client or defendant; the amount of the success fee and insurance premium should be disclosed earlier, such as if judgment is entered in default; and that if the claimant has legal expenses insurance, additional liability payable under an after-the-event policy should not be recovered.At the same session, former Law Society President Tony Girling, a costs expert, warned forcefully that the increasing judicial practice of slicing costs by as much as 85% is causing claimant solicitors a major conflict headache if they do not have recourse to the client for any shortfall; such as if the client has legal expenses insurance.He gave the example of a defendant offering 2,000 when the solicitor believes he can win 4,000 at trial.

The possibility of costs being reduced significantly may make it more attractive to the solicitor to settle, while the client will want to go to trial.There was strong support for abolition of the indemnity principle, but the session chairman, Fraser Whitehead - chairman of the Law Society's civil litigation committee - said the 'profoundly depressing' news was that there was little sign of the rules committee acting on the government desire for abolition.'The judicial perspective is that they do not have the power to remove the indemnity principle without primary legislation,' he said.There was also support from Ms Burn and from the floor from Richard Fox, chairman of the London Solicitors Litigation Association, for the introduction of contingency fees.

'Conditional fee agreements are far too complex for solicitors and clients.' she said.

'And if they can't understand them, how can judges?' Ms Burn agreed with Mr Girling that the issue that needed to be resolved first was how contingency fees would work with non-monetary claims.Neil Rose