Napier to consider cap on contingency fees

Michael Napier, former chairman of Irwin Mitchell, will chair the first meeting today of a Civil Justice Council (CJC) working party set up to increase the use of contingency fees, a key recommendation of the Jackson report.

The working party has been asked to consider, among other things, whether a limit should be imposed on the percentage lawyers should be able to take from their clients' damages. It will report back at the end of July.

Napier recently led a CJC working party which negotiated a code for third-party funding agreements (see solicitorsjournal.com, 23 November 2011).

A spokesman for the CJC said the type of contingency fee agreements recommended by Lord Justice Jackson were similar to those operating in Ontario, Canada.

Under the Ontario model, the successful party recovers costs from the other side on a conventional basis and pays the rest of the contingency fee from their winnings.

Provision to extend the use of contingency fees is contained in the legal aid bill. They are already used in 'non-contentious cases' such as those handled by employment tribunals.

James Davies, joint head of employment at Lewis Silkin, said legal aid was available to such a small number of people that there was a real problem of access to justice.

'Extending contingency fees should be looked at, as a way of giving people who have been wronged access to justice,' he said.

'We can see people in the US having that access. Over there they are used disproportionately in high-value cases, because that is the only way lawyers can get the rewards to interest them in pursuing cases.'

Davies said contingency fees encouraged clients to 'see you as having a stake in the litigation and acting in their interest'.

He went on: 'A cap would need to be looked at very carefully, as would other measures to avoid abuse. In low-value claims there is often not much money for lawyers to fund the litigation.'

Laurie Anstis, solicitor at Boyes Turner, said his firm had acted for defendants who were on the receiving end of contingency fees but never found out how much they were.

He said it was 'fairly common' for solicitors and non-solicitor advisers to act on a contingency fee basis at tribunals.

'Most employers are never sued through the ordinary courts,' he said. 'It's the tribunals they're worried about.

'Allowing contingency fees in the courts would not lead to a great increase in litigation. Claimants tend to be wealthy people who can afford to pay on a standard basis.'

Anstis said that even if there was a rule preventing solicitors from claiming above a certain percentage, it would only make a difference if it was extended to the 'host' of non-regulated advisers.

'Fees for bringing tribunal claims are likely to be a far bigger factor than caps on lawyers' earnings.'

Along with limiting the percentage of damages lawyers can take from clients, the CJC spokesman said the working party would consider the 'conflicting interests' of clients, solicitors and barristers.

It will also consider whether court approval should be required for the use of contingency fees in certain cases and whether solicitors should be obliged to notify the other side that an agreement has been entered into.

Further issues are whether special rules of court should be created for assessment of costs and whether solicitors should be liable for adverse costs. Napier said he was looking forward to working with experts from the legal, insurance and regulatory worlds to consider this 'very significant reform' to the funding of civil litigation.