FIXED SUCCESS FEES FOR EMPLOYERS' LIABILITY ACCIDENT CASES

30 Sep 2004 04:15 PM

Further stability, certainty and transparency will be brought to conditional fee agreements when fixed success fees are extended to the estimated 48,000 annual claims brought for accidents at work from 1 October, Civil Justice Minister David Lammy announced today.

New rules of court will fix the success fee paid by a defendant's insurer to the claimant's solicitor or barrister where they are funded by a conditional fee agreement. For example, insurers will pay solicitors their normal costs plus a success fee of 25 per cent of these costs if they win cases that settle prior to court and a 100 per cent success fee for the riskier cases that go to trial.

The new rules implement an agreement facilitated by the Civil Justice Council and DCA between representatives of the legal professions and the liability insurance industry designed to make recoverable legal costs more predictable, to speed up the settlement of cases and to reduce claims costs.

David Lammy said:

"Workers who are injured at work as a result of someone's negligence deserve to be able to get appropriate redress quickly. The introduction of fixed success fees will help ensure that legal and insurance professionals deal with claims more efficiently, effectively and economically and justice is delivered at a reasonable and proportionate cost.

"These changes will help to continue the programme of civil justice reforms that we and the Civil justice Council have pioneered. Our reforms will help ensure that professionals focus on providing world class legal services for the deserving while helping to deter those who simply want to have a go."

Fixed recoverable success fees for road traffic accident claims were introduced on 1 June 2004.

Lord Phillips of Worth Matravers, Master of the Rolls, Head of the Civil Justice Council and Chairman of the Civil Justice Council, commented that:

"The introduction of fixed recoverable success fees continues the welcome momentum in developing workable solutions to the costs problems we face. Once again some of the decisions made to produce these agreements have been difficult ones for all sides. But certainty and prompt settlement brings considerable benefits to all participants, leads to better service for those seeking compensation and leaves the courts to focus on dealing with cases on their merits rather than about the costs involved."

Work is underway to try to fix recoverable success fees for employers' liability disease and public liability claims and mediations are due to start in October. It is hoped that agreement will be reached by the end of this year with implementation during the first part of 2005. The Better Regulation Task Force in its report Better Routes to Redress published in May express support for this work and recommended that all those involved in the discussions should participate actively and constructively. The Government response to the report will be published shortly.

Notes to Editors

1. The Civil Procedure (Amendment No2) Rules 2004 can be downloaded from HMSO via the following link:
http://www.dca.gov.uk/civil/procrules_fin/index.htm

2. Rule 14 and Schedule 2 of the Amendment Rules insert a new section in the CPR rules on legal costs in employers' liability accident cases. The new rules apply a range of fixed success fees which solicitors and barristers can recover from the losing party in winning cases run under a conditional fee agreement (CFA). The level of the success fee is determined by when the case concludes. For solicitors, a fixed success fee of 25% will be recoverable, except in cases where a trial takes place that will attract a success fee of 100%. An additional uplift of 2.5% to the 25% will be provided for solicitors where the CFA claim is funded by a membership organisation (such as a Trade Union). In exceptional cases the success fees will be subject to assessment by the court. For barristers the fixed success fee will be 25% for issued cases except those that conclude at trial for which it will be 100%. For multi track cases which conclude within 21 days before trial the success fee will be 75% and for fast track cases that conclude within 14 days before trial it will be 50%.

3. This will implement an agreement reached in May 2004 between representatives of the legal professions and the liability insurance industry, which was facilitated by the Civil Justice Council (CJC) with assistance from the DCA. Those involved in the agreement included representatives of the Association of British Insurers, the Bar Council, the Association of Personal Injury Lawyers and the Forum of Insurance Lawyers.

4. The success fee scheme for solicitors is based on a revenue neutral model. That is the income obtained from a CFA portfolio should overall be no more than would be obtained from a portfolio of cases without CFAs. The fixed success fees specified in the rules are expected to achieve that. Research conducted by Professor Paul Fenn and Dr Neil Rickman provided the evidence base to support the development of the RTA and employers' liability agreements. This research "Calculating 'Reasonable' Success Fees for Employers' Liability Accident Claims" was commissioned by the CJC and funded by the DCA and the report is available from the CJC's website. www.costsdebate.civiljusticecouncil.gov.uk

5. The Civil Justice Council is an advisory non-departmental public body established under the Civil Procedure Act 1997 and is chaired by the Master of the Rolls, Lord Phillips. The CJC is required to: keep the civil justice system under review; consider how to make the civil justice system more accessible, fair and efficient; advise the Lord Chancellor and the judiciary on the development of the civil justice system; refer proposals for changes in the civil justice system to the Lord Chancellor and the Civil Procedure Rule Committee, and make proposals for research. Its membership includes senior judges, lawyers, consumer and commercial representatives, legal advisers and academics. Further information about the CJC can be obtained from the Secretariat on 020 7947 6670 or email cjc@courtservice.gov.uk..

6. The Civil Procedure Rule Committee is an advisory Non-Departmental Public Body. It was created by virtue of section 2 of the Civil Procedure Act 1997 to make rules of court for the Civil Division of the Court of Appeal, the High Court and the County Courts.

ENDS