25 February 2013Print This Post

Bar Council calls for changes as peers prepare to vote on new CFA and DBA rules

Parliament: motion to approve debate

The government needs to deal with range of defects in the new rules for 1Z0-043 conditional fee agreements (CFAs) and damages-based agreements (DBAs), the Bar Council has urged ahead of a debate on them in the House of Lords tomorrow.

As well as describing the draft CFA order and DBA regulations as currently “not fit for purpose”, the Bar Council complained about the “manner and speed” in which the regulations relating to the Jackson reforms are being made.

In a briefing issued to peers for the motion to approve debate, the Bar Council said the drafts in their current form “will seriously undermine Lord Justice Jackson’s recommendations and reduce access to justice”. They will also cause unnecessary satellite litigation and limit the commercial use of DBAs, it argued.

On the CFA order, it recommended excluding VAT from the success fee cap, and allowing lawyers to take the success fee from future losses as well as past losses in larger cases.

“The limit to past losses will mean that the risks of taking on such litigation (which is complex, difficult to predict, time consuming and involves significant disbursement) will not be properly compensated by
00M-651 the level of the CFA. Practitioners will simply not be able to take on such cases; and this will mean that claimants will not get to court at all.

“So the perverse result of the limit is that instead of protecting the damages recoverable by the worst hit claimants, the reform means that those claimants will get no representation and thus no damages at all. It was for this reason that Lord Justice Jackson amended his view, in his speech in February 2012, and said that the 25% should be of all damages (as it in fact had been prior to 2000) in appropriate cases.”

The Bar Council said similar changes should be made in relation to DBAs as well.

It also highlighted an ambiguity in the CFA order as to whether the success fee payable to counsel can be recovered between the parties where a solicitor enters a CFA before 1 April, but counsel enters into one after. If this is not clarified, satellite litigation will result, it predicted.

Echoing concerns first raised by City solicitors Herbert Smith Freehills, the briefing warned that the DBA regulations – unlike with CFAs – do not allow for hybrid agreements where lawyers agree that they should receive some costs even if the case does not succeed. “The current policy of disallowing hybrid agreements for DBAs goes against Jackson LJs original recommendations and will mean that DBAs will be seldom used by commercial firms.”

Dr Mark Friston, vice-chairman of the Bar Council’s remuneration committee, said: “The Ministry of Justice’s approach to the Jackson changes is far too rushed. There are few official announcements regarding policy changes; practitioners are largely relying on rumour when planning for changes which are now less than six weeks away.

“The situation is wholly unsatisfactory; issues of significant public interest require and deserve proper and detailed attention.”

By Neil Rose