Top judge pushes for recoverability review

Serious consideration should be given to ending the recoverability of success fees and insurance premiums in conditional fee cases, the senior costs judge said last week.Addressing the Law Society's civil litigation conference, solicitor Peter Hurst said that before recoverability was introduced in April 2000, 'we were rubbing along more or less okay'.

Recoverability has since resulted in the huge growth of satellite litigation, he argued.'It wasn't broken, so why try to mend it?' he asked.

'The simple point is that [the system is] not working.'Judge Hurst quoted both Chris Ward of Abbey Legal Protection and former Forum of Insurance Lawyers president Martin Staples as telling delegates at the Law Society's annual conference last year that recoverability was undermining the system of conditional fee agreements with insurance.

'It was suggested that if the government had left well alone, clients would not have been left out of pocket,' he said, as some predicted that judges would have put up damages to cover the extra costs.Fraser Whitehead, chairman of the Law Society's civil litigation committee, told delegates that the system had not worked before recoverability.

'We just didn't know that it didn't work,' he said.David Marshall, treasurer of the Association of Personal Injury Lawyers, said later that Judge Hurst was voicing the irritation of many that the system has not bedded down well.

'But the point of recoverability is to leave damages intact,' he said.

'That is government policy.'He added that if recoverability was done away with in favour of higher damages, practitioners would want the security of having the change enshrined in legislation.A Lord Chancellor's Department (LCD) spokeswoman said: 'The government recognises that a wide range of views exists on the way in which the costs regime operates in civil cases.

This issue is part of the continuing debate on the development of costs law under the Civil Procedure Rules.

The Civil Justice Council has set up a costs working group to consider ways in which our costs system can be improved.'Meanwhile, the Master of the Rolls, Lord Phillips of Worth Matravers, told delegates that the government may be shifting its stance over abolition of the indemnity principle.An impasse arose last year when Lord Phillips called on the LCD to abolish it through legislation; the LCD responded by saying it could be done through a rule of court.However, Lord Phillips said the Lord Chancellor, Lord Irvine, was 'in sympathy' with his view, and that it is now 'a question of finding time for legislation'.He explained: 'It's not just a question of removing the indemnity principle.

We need to put something in its place.'The LCD confirmed that Lord Irvine was giving weight to Lord Phillips' argument but no decision had yet been reached.Also last week, the House of Lords granted the defendants leave to appeal Callery v Gray, the key conditional fee case decided by the Court of Appeal last July.

The hearing has been set for 24 April.