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 [1999] (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:

  • Copy of the CFA and details of the date the agreement was taken out
  • The date of any insurance policy with copy certificate and policy wording
  • The level of any success fee with reasons that determined the precise percentage
  • The amount of percentage increase that pertains to the postponement of fees and expenses
  • Details of the inquiries undertaken to determine whether there is any other means of funding (such as legal expenses insurance)
  • Details of the claimant's household and motor insurers.
    • Following the introduction of a scheme on 1 June that fixes recoverable success fees where the claimant is funded by a CFA that provides for such a fee, there may be no need to seek sight of the CFA itself. This is providing that agreement can be reached in respect of costs, and more particularly the success fee.The percentage increase for a success fee is 12.5% for cases that settle out of court, whereas the success fee is 75% for multi-track cases that conclude within 21 days before trial, and 50% for fast-track cases that conclude within 21 days before trial. The success fee increase is 100% for those cases that are resolved at trial.There is an escape mechanism from the fixed success fee regime, where the value of the claim is in excess of £500,000.

    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

    Topics