Government to simplify Conditional Fee Arrangements

United Kingdom

The Department for Constitutional Affairs announced on 29 June 2004 that it intends to simplify the rules for Conditional Fee Arrangements (CFAs) in order to promote access to justice. Industry will be concerned that this represents a further step towards an unrestricted compensation culture, since defendants' costs have risen substantially as they have to pay success fees. The government action is taken after 4 years' experience with CFAs, which replaced Legal Aid. There has been criticism that CFAs are complex and opaque, and extensive criticism of consumers being ripped off by unregulated and unscrupulous intermediary claims management companies. Work is continuing on trying to identify whether the 'indemnity principle' (under which a party cannot recover from the loser more than he is actually liable to pay his lawyer) can be abolished, but there is no agreement on this. The results of a detailed academic study into the effects of CFAs are awaited in early 2005.

For further details please contact Chris Hodges on +44(0)207 367 2738 or at [email protected] [email protected] or Anthony Barton on +44(0)207 367 2117 or at [email protected]