The Gazette 1994

GAZETTE

MWH JUNE 1994

Constitutions, have been mounted in most States of the US where caps have been enacted and the challenges have been upheld in two thirds of the States where they have been heard.

very carefully because the aim is that the percentage uplift should reflect the risk of losing." There were many pitfalls to be sorted out on conditional fee agreements, said Michael Napier. So far, the Lord Chancellor had refused to make a regu- lation providing for a cap on the success fee, though this could be particularly important in a case which resulted in low damages and high costs, because, in reality, while the calculation of the conditional fee was not based on a percentage of the damages, the payment of the success fee by the client would come out of his or her damages. Unless this problem could be overcome conditional fees would be virtually unworkable. However, a solution was on the horizon because the Law Society of England and Wales was close to concluding terms on an "after the event" insurance policy which, for a modest premium, would protect the client against a payment of costs if the case was lost and would also include payment of the plaintiff's own disbursements. "Such insurance will be the key to unlock the door to safe usage of conditional fees for the client. Further protection is provided by regulations which place a high duty on the solicitor to explain the agreement to the client. A cooling off period has also been mooted to allow the client to think it all over before signing up." Michael Napier said there had been an extensive debate on the regulatory aspects of conditional fees. "The prevailing view is that adequate professional regulations already exist to cover conditional fees. There will also be extensive guidance to the profession in explanatory booklets and clients will receive an easy to understand leaflet." In his address to the seminar on ADR - Paradise Regained?, Max Abrahamson, Consultant, McCann FitzGerald, commented that he was opposed to contingency fees and that he preferred to practise law rather than money lending. In his view, the two justifica- tions used for unrestrained contingency fees were conflicting: i.e. that a high percentage fee was necessary because Hired Guns and Champions

of the high risk and secondly, that such fees did not promote disputes because cases were only taken if they had a good chance of success. Alternative Dispute Resolution, said Max Abrahamson, was sometimes mistakenly seen as an attempt to regain a lost paradise where disputes could be decided equitably, but this was to overlook the real practical (non lawyer- made) complexities of disputes nowadays. ADR thrived because of the belief that ordinary resolution by the courts was unsatisfactory and a view that we had a "Rotweiller" system of advocacy. Yet it was a mistake to see alternative dispute resolution as a form of compromise. The solicitors' profession should emphasise that it could resolve the imbalance between these two views, said Mr. Abrahamson. Solicitors must persuade the public that they have - and always have had - a dual role of being champion and hired gun, i.e. that they would fight as hard as possible to settle and then go into win. There was nothing inconsistent in this approach and the public should be convinced of it. Solicitors had always practised a form of alternative dispute resolution, for example, by engaging in a frank exchange with a colleague in order to settle a case. Clients must be encouraged to trust their lawyers to perform this role. Dispute resolution was a very difficult job of work, he said, and it was not necessarily assisted by our current system of advocacy or, indeed, any of its trappings such as "fancy dress which is designed to provoke awe". A large number of ADR practitioners were not lawyers, and it was essential for the solicitors' profession to promote its expertise and to switch the emphasis towards the investigation of the issues in dispute and away from presentation. It was necessary to integrate the role of alternative dispute resolution and litigation. Solicitors should do their own advocacy, he stated; they were well capable of it and should not hold back.

Litigation in the United Kingdom

Over the last six months the long- debated problem of access to justice had received major attention in England and Wales said Michael Napier, Chairman of the Association of Personal Injury Lawyers in the UK, in his address to the Conference on the topic,' Litigation in the UK - Has it a Future? It was a debate in which the judiciary had become involved, speaking out in favour of simplifying litigation, reducing delay and cutting costs. While these objectives were desirable they would not, of themselves, necessarily open the door to would-be litigants, said Michael Napier, noting that in 1979 80% of the UK population was eligible for legal aid but, in the wake of Treasury pressure on the Lord Chancellor to cut the rise in the legal aid bill, this figure had been reduced to less than 50% in today's terms. The introduction of a conditional fee system, due to commence next autumn, would go some way to "plugging the legal aid gap", said Michael Napier, who explained that the conditional fee system was different to the American contingency fee. "The basic concept is that in return for agreeing to charge the client no fee if the case is lost, the lawyer can charge the client a success fee if the case is won. This is not a percentage taken out of the damages because the success fee is calculated as an uplift on the solicitor's normal costs for conducting the case. The solicitor will recover costs as usual from the losing defendant and the client will simply pay the success fee on top. The success fee can be as low as nil% or as high as 100% of the 'standard' fee in particularly risky cases. Unlike contingency fees in the US, where the lawyer's percentage of the damages is usually around one-third, the conditional fee agreement is more flexible and will require the solicitor to assess the risk of the case in question Conditional Fees

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Barbara

Cahalane

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