An 11-man expert working party will meet for the first time today to advise on how to introduce contingency fees for court work in England and Wales.
The working party, chaired by Michael Napier, has been set up by the Civil Justice Council (CJC) and is due to report back by the end of July. Its findings will then be presented to the Ministry of Justice and the regulatory bodies for the legal professions.
The CJC said a working party was appropriate in view of the significance of the introduction of contingency fees in contentious work – known formally as damages-based agreements (DBAs) – for the future of funding civil litigation.
DBAs were recommended by Lord Justice Jackson and are legislated for in the Legal Aid, Sentencing & Punishment of Offenders Bill. The government’s current plan is to allow DBAs – which are already permissible in tribunals – in April 2013, when all of the Jackson reforms will be implemented.
Also on the working party are: Nicholas Bacon QC (4 New Square), Richard Collins (Solicitors Regulation Authority), Don Clarke (Forum of Insurance Lawyers and Bolton firm Keoghs), Peter Douglas (Bar Standards Board), David Greene (Law Society and London firm Edwin Coe), Professor Rachel Mulheron (CJC and Queen Mary, University of London), Hardeep Nahal (Commercial Litigation Forum and US firm McGuireWoods), John Spencer (Association of Personal Injury Lawyers and Spencers Solicitors); Peter Smith (CJC and FirstAssist Legal Expenses); and Colin Stutt (formerly of the Legal Services Commission).
The contingency fee model recommended by Lord Justice Jackson is modelled on that operating in Ontario, Canada. It is a hybrid in that costs are recovered and set off against the contingency fee, rather than being a pure cut of the damages as in the US. Any excess will be paid by the client, in line with the end of recoverability for success fees in conditional fee agreements (CFAs) introduced by the bill.
Among the issues the working party will investigate are the conflicting interests at play; whether the percentage that lawyers should be entitled to recover should be limited or require court approval in certain circumstances; whether, and if so in what circumstances, a lawyer acting under a DBA should be liable for adverse costs; whether it should be possible to enter partial DBAs, analogous to the ‘no win, low fee’ CFAs; and whether there should be an obligation to notify opposing parties that the lawyers have entered into a DBA.
Mr Napier, who retires from Irwin Mitchell shortly, said: “I am delighted to have been asked to chair the working party to look at the introduction of damages-based agreements. I look forward to working with the members of the working group drawn from the legal, insurance and regulatory worlds, to consider this very significant reform to the funding of civil litigation.”
Last year Mr Napier, who was one of Lord Justice Jackson’s assessors, chaired the working party that drew up the code of conduct for third-party litigation funders.