Disease Litigation – Fixed Fees

In Blog by AAH

Disease Litigation – Fixed Fees

The news that an agreement had been reached on fixed recoverable success fees for employers’ liability disease cases was widely welcomed by the legal profession1 . The agreement will be implemented by the Civil Procedure Rule Committee and will be implemented in October 2005.

The new agreement 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 (‘no win no fee’ agreement).

The agreement follows two similar schemes for Road Traffic Accidents and Accidents at Work cases and is a positive move which will set in stone the question of success fees in one more area where liability is agreed.

Provisions of the Agreement2

27.5 % success fees in claims arising from asbestos related diseases (or 30% if the claim falls under s.30 Access to Justice Act)

62.5 % success fees in claims arising from deafness, vibration white finger and other diseases except stress and repetitive strain injury cases

100% success fee in claims arising from stress and repetitive strain injury.

Counsel’s fees should follow the same basic structure as for RTA and employers liability cases with the following success fees:

Fast track

14 days or less before trial – 50% for asbestos claim, 62.5% for deafness etc and 100% for RSI & stress

The relevant success fee applicable to solicitors for claims that conclude more than 14 days before trial

Multi track

21 days before trial – 75% for asbestos and deafness etc and 100% for RSI and stress cases

The relevant success fee applicable to solicitors for claims that conclude more than 14 days before trial

Parties can seek to escape the fixed success fee provisions and seek an alternative success fee if the claim is greater than £250,000.00

The need for an exceptionality clause and its precise working with regard to test case litigation will be discussed over the next few months. Therefore, the main part of the agreement as above would come into force in October 2005 with the remaining exceptionality provision, if appropriate, implemented in April 2006.

Implications
The flexibility of the new agreement means that it will be possible to recover success fees depending on the type of claim being bought.

The aims of the new agreement are to detract from the focus on costs, leaving the courts to focus on dealing with cases on their merits rather than the costs involved3 . Whilst some commentators argue that the fixed fees do not take into account the volume of work involved in investigating cases4 for the majority of cases more structured environment will prevail.

The outstanding issue of exceptionality is yet to be finalised and may not be implemented until 2006 which has disappointed some including APIL’s president Allan Gore QC. The fact that the agreement has not been wholly concluded has left a residual uncertainty in some areas, where some commentators have suggested that the risk profile in test cases has the potential to change overnight. The exceptionality clause will therefore play a vital role in removing those cases affected by test cases from the provisions of the scheme.

Insurance
The conditional fee market is strongly linked to the insurance market and in particular, the availability of competitive after-the-event- insurance (AEI).

Generally, policies are either individually underwritten or issued under delegated authority. Policies arranged under delegated authority provide for automatic cover on the basis that the insurance company has already assessed the firm. Individually underwritten policies are issued on a case-by-case basis.

The defendant’s insurer will also benefit from the new scheme. There will no longer be any uncertainty regarding the success fee which many claimant solicitors do not divulge in order to conceal their assessment of the cases chances of success.

Clearly, the immergence of the fixed recoverable success fee in most disease cases has implications for the insurance market. Except for those cases subject to the exceptionality clause, policies can take on a more structured format and the risk will be reflected in the fixed fee from the outset.

For more information contact aah@hafezis.com

1. Gazette, 7th July 2005
2. Civil Justice Council , Press Release, 1st July 2005
3. Lord Phillips of Worth, Master of the Rolls, Head of the Civil Justice Council
4. Gazette, 18th August 2005, Jon Robins