The motor personal injury environment is continually evolving. One area that demands particular attention is conditional fee agreements and predictable costs. Fiona Andrews explains
The explosion in the popularity of conditional fee arrangements (CFAs) in legal proceedings can be traced to the Access to Justice Act  (AJA).Commonly-referred to as no-win, no-fee deals, CFAs plugged the gap when the act triggered the demise of legal aid for personal injury actions.CFAs are governed by a number of rules. For example, CFA Order 1998 (SI1860/1998) specifies that a success fee cannot be greater than 100% of the award. The CFA Regulations 2000 (692/2000) specifies what should be included in the CFA itself. In simple terms, a CFA and the premium charged for the relevant insurance policy are known as additional liabilities, and are now recoverable from the losing party.Within a CFA, reference to any success fee should incorporate the reasons for setting the percentage at a particular level, and what proportion of the percentage relates to the deferment of payment (that is, the 'interest' element).Since June 2003, it has been possible for the claimant's solicitor to openly agree with a client that no charge will be made, over and above what is recoverable from the other side. This reflects the indemnity principle as to costs.
Risk assessmentHowever, it is also accepted that solicitors should assess the risk associated with a case at the outset (with this determination being subject to the discovery or disclosure of fresh evidence). This risk assessment is used to quantify the success fee that can be applied.Generally, the three basic assessments are: low risk is 20%; medium risk is 50%; high risk is 100%. Within these parameters, the precise percentage in each case may vary. Solicitors will be aware that the more detailed their risk assessment, the greater the chance it will be acceptable to the judge.If cases are settled within the protocol period, the success fee in straightforward road traffic accident cases should be reduced by 5%. In complex employers' liability cases, however, the reduction may be in the order of 40%.Defendants in cases where a CFA is deployed should seek a range of basic information, including:
Predictable costsSection II, Part 45 of the regulations is designed to avoid the continuous battle between claimant and defendant sides. The new rule provides that the claimant is entitled to recover only fixed costs of £800, plus 20% of the damages agreed up to £5,000, and 15% of the damages agreed between £5,000 and £10,000.Section 25A of the Part 45 Practice Direction states that the above rule only applies to road traffic disputes (as defined in rule 45.7(a)), where the accident that gave rise to the dispute occurs on or after the 6 October 2003. It does not apply to disputes where the agreed value of the damages is within the small claims limit, or exceeds £10,000, and the case must be resolved prior to proceedings being issued. There is a London weighting to reflect the higher costs regime in the capital. Children, patient and multiple party actions are excluded from the scheme.A review of the scheme will occur in approximately two years. It' Fiona Andrews is manager of the Faculty of Claims and head of CPD at the CII