| A scheme which allows clients to pay their solicitor only if they win their case is now a well established part of legal practice - but questions remain about its fairness, according to new research by the Policy Studies Institute. |
| Conditional fees were introduced two years ago for people with cases of personal injury, insolvency and applications to the European Court of Human Rights. Under the scheme, clients pay their solicitor's fees plus an extra 'success fee' if they win their case. If they lose, they pay nothing. |
| Although the majority of people bringing conditional fee cases appear likely to have been ineligible for legal aid, the research suggests that it is still too soon to say whether the scheme has succeeded in extending access to justice, which was its original intention. Some of the cases under study might have been taken on anyway. |
| Conditional fees are likely to become increasingly common, although this first assessment of the scheme expresses concern about the way solicitors assess risk and calculate the extra fee that successful litigants have to pay. |
| The Price of Success, by Stella Yarrow, will be launched at a conference addressed by Geoff Hoon MP, Parliamentary Secretary at the Lord Chancellor's Department, on Tuesday 23rd September. The research is based on a survey of 120 firms of solicitors and an analysis of 197 conditional fee cases begun in the personal injury field. It has already been submitted to the Lord Chancellor's Department, which will shortly decide whether to extend the scheme. |
| The scheme works by allowing solicitors to charge the additional 'success fee' in compensation for the risk of not being paid if they lose. The size of the extra fee should be proportionate to the risk involved. However, the research found evidence of considerable inconsistency in the size of 'success fee' calculated for cases with similar chances of success. Moreover, the fee appeared to be too high in up to six cases in ten which had 'very good' chances of winning. |
| A surprisingly high proportion of cases were regarded as having relatively low chances of success, given that personal injury cases usually have an extremely high success rate. This may indicate that some solicitors could be over-estimating the chances of failure and therefore charging a higher 'success fee'. Such concerns 'could cast doubt over the fairness of the entire scheme' the author concludes. |
| Overall, the average 'success fee' charged by solicitors was 43 per cent but for one in ten cases it was close to the maximum 100 per cent. However, the voluntary 25 per cent cap on the proportion of damages that can be swallowed up by the 'success fee', recommended by the Law Society, is used by almost all solicitors. |
| 'The fairness of the 'success fee' depends on the accuracy of the solicitor's assessment of risk' said Stella Yarrow.'However, doubts exist about how well solicitors are making such assessments and this is a potentially serious causefor concern. The situation is compounded because clients are in no position to make their own assessment of risk and it is difficult for them to 'shop around' to find the best deal. However, the full picture won't emerge until the outcome of these early cases is known. |
| The research was sponsored by the Lord Chancellor's Advisory Committee on Legal Education and Conduct. |
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