A contingent legal aid fund (CLAF) has merit but its viability cannot be assessed until the Jackson reforms settle down, a Bar Council-commissioned report has concluded.
Consultants Europe Economics, backed by the Bar Council, called on the government to back the concept of a CLAF, a private fund which would back cases in return for a portion of the damages and reinvest the money in other cases.
A Bar Council working party – under the chairmanship of Guy Mansfield QC of 1 Crown Office Row – has been investigating the viability of a CLAF as another potential source of funding for civil litigation.
The economists – who cautioned that there is insufficient data in the public domain on which to base firm findings – said it could be that conditional fee agreements (CFAs) are sufficiently profitable “for solicitors to reduce their margins while retaining volume” in a post-Jackson world.
“It is too early to say how the reforms will work through the CFA regime. Some clients may accept that they will have to pay success fees and insurance premia, while solicitors and insurance companies may cut their charges in order to retain case volume…
“We cannot say definitely that a CLAF or CLAFs will emerge, nor when. The most we can say is that the CFA reforms make it more likely that, at some stage, this will happen.”
The report said “there is likely to be a potential market for CLAFs”, with the numbers of cases that might be suitable for CLAF funding running into the “hundreds per annum or possibly the low thousands”.
These might initially be small, non-personal injury cases which are not attractive to claimants and/or solicitors under CFAs after the Jackson reforms, it said, although it may be that data will show that clinical negligence cases could be suitable for CLAF funding too. There might be little to choose between CFA and CLAF funding in personal injury.
Europe Economics was confident that, with “a convincing business plan”, a small CLAF should not have difficulty in raising initial funding, whether as a commercial enterprise or as a charitable/not-for-profit entity.
The report said it would help voluntary bodies to come forward on a not-for-profit basis if they received government confirmation that their CLAFs would not face adverse costs orders or at least should benefit from qualified one-way costs shifting; and that no arguments based on the doctrine of maintenance and champerty could be raised by a client who sought not to pay the due share of damages, or a losing defendant seeking to avoid an adverse costs order.
Bar Council chairman Peter Lodder QC said: “Effective access to justice is at the heart of a free democracy: it is critical to the political and economic health of this country. Faced with continuing legal aid cuts, we cannot turn back the clock to the days when only the very wealthy could afford to litigate to obtain redress for harm caused by others’ wrongdoings; a contingent legal aid fund can probably help.
“We invite the government to take this report seriously, support the concept and provide necessary encouragement for its promoters.”