Civil Justice Council calls for contingency fees across the board
A Civil Justice Council (CJC) working party has called for contingency fees to be extended to civil litigation generally.
Its report, published last week, makes 18 recommendations to the Ministry of Justice for the introduction of damages-based agreements (DBAs), also known as contingency fees, next April.
Michael Napier, who chaired the working group, says: “The introduction of DBAs will be an important addition to the menu of options for funding civil cases when the new costs regime is introduced in April 2013. But this is not an easy subject and this was a tough piece of work for the working party, which had little time to cover much complex, and at times contentious, ground.”
The working group called for only one set of regulations for all DBAs, including for claims management companies; no limit on the damages from which a contingency fee can be taken in personal injury cases; and a consistent regulatory approach to DBAs and conditional fee agreements to avoid “costs wars”.
It advised that personal injury cases be capped at 25%, and employment cases at 35%, but was divided on the approach for commercial cases—the majority favoured no cap while others wanted a cap of 50%, particularly for consumer or small business claims.
It suggested that professional bodies prepare model DBAs, and recommended against there being any obligation to notify an opposing party that lawyers have entered into a DBA.
Nick Rowles-Davies, a solicitor and consultant with litigation funder Vannin Capital, says: “It is my firm view that caps should not apply in commercial cases; freedom of choice and the ability to reach a commercial bargain should always prevail in commercial situations.”
Iain Stark, chairman of the Association of Costs Lawyers, says: “I expect there to be a great deal of interest from consumer groups into the recommendations and particularly where the consumer will potentially be at a disadvantage, such as the recommendation that the damages from which the contingency fee can be taken in personal injury cases should not be limited.
“One set of regulation is a good idea but it is still unclear as to how this would manifest itself amongst self-regulating entities, such as claims-management companies and litigation funders.”
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