The excellent Jack of Kent has blogged today on the proposed and recently blocked changes to CFA uplifts in defamation proceedings.
I'm not sure his article really gets to the core of the issue.
The purpose of a Conditional Fee Agreement (CFA) uplift is to compensate the lawyer for not being paid in lost cases by allowing her/him to take higher fees in cases that do win. Back in 1998, Kerry Underwood's book 'No Win, No Fee, No Worries" went through the maths. The idea however is that if a case has say a 75% chance of winning , the lawyer will win 3 out of 4. Thus he needs to take the same in fees across the three cases as he would across four normally funded ones. Mathematically this translates to needing a 33.33% uplift in fees on all cases - three winners then produce 3 x 133.33% of normal fees - which equals 400% of fees across the four cases (including the lost ones). Hey presto - lawyer is no better and no worse off.
Following this maths through, you can see that the curve is an exponential one. To justify a 100% success fee, the case has to be 50/50. (Out of two cases, you win one and lose one, so need 200% of fees on the winner to balance the loser).
What success likelihood does a 10% uplift translate to? The answer is that the lawyer needs to win about 91% of cases to balance the books.
So, to say that "I doubt that even City libel lawyers will be callous enough to turn actually winnable cases down because they will get only 10% windfall instead of a 100% one" as Jack does doesn't really hit the mark. I don't think that lawyers are, or should be seen as, charities, but there is a long and honourable track record of English lawyers taking on work 'pro bono publico' - in other words for free because they think the case deserves it.
The facts are surely that lawyers who would like to represent relatively non-wealthy individuals will struggle to make money on a 10% success fee, and charity is not without bounds. I'd ask Jack a question - if you had to back 100 Simon Singh-type cases, from his point of view, do you think you would be successful in more than 9 of them? Not sure I would. This would leave our Singh-century either paying their lawyer as private clients, or trying to find 100 lawyers competent and persuadable to work for free.
So, the first issue is, how are lawyers able to claim and get 100% success fees in what are felt to be strong cases? You don't just recover the success fee you ask for - it has to be justified as reasonable. Why aren't lawyers - in all fields, instructed to submit their records to independent inspections? If we find that, say, a clinical negligence lawyer runs 100 CFAs past issue (there will be a lot of drop-outs before) at 60% merits, and wins more than 60 (which I'll bet they do) then the merits percentage is wrong, not the system. If this could be regulated and moderated, then we could get to proper risk assessments, rather than the system where 100% success fees are routinely claimed on everything.
The second issue, is that, whilst CFA uplifts are a huge issue, they are just that - uplifts. If the lawyer is charging £500 per hour or more as his basic fees, this contributes just as much to the overspend.
Lord Jacksons recent review of civil costs has a great deal to say on success fees, legal insurance etc, but is strangely silent on lawyers' basic costs. His preliminary report concludes that the average salary of a legal fee earner is around £40,000. This may be right if you include all the paralegals slaving away in personal injury battery operations in the Midlands, but I'd bet that most city partners in 'reputation management' are closer to that sum every month.
Bottom line - whilst lawyers take several hundred pounds an hour, litigation is going to be really expensive for most of us, and if we want to reform things, that should be the place to start.
A good place to start with any discussion on legal expenses are the SCCO Guideline rates (what the Courts use to assess a "reasonable" hourly rate for fee earners) http://www.hmcourts-service.gov.uk/publications/guidance/scco/previous_rates.htm (2009 was the last time they were updated).
ReplyDeleteAs you can see, it isn't usually considered reasonable for even a Partner in a City law firm to charge £500.00 per hour.
In any event, if a solicitor thinks that a case has decent prospects of success, they'll take it on, even if there is a minimal - if any - success fee.
Agreed - though are these not the rates recoverable - isn't what is charged solicitor to client up to the parties?
ReplyDeleteI'm no expert on reputation management cases, but in clin neg, where I do know a bit more, lawyers usually have clients who can't fund a case in full, and know that whilst there are sure-fire winners, there are many cases where experts don't measure up, or a Judge prefers a defence point of view. Without CFAs (and insurance because the client won't be able to pick up the tab for losing) lawyers say the riskier ones are the ones they wouldn't take on.
The SCCO rates are used as a guide to the rates recoverable from the other side. Of course, you can agree whatever rate you want with your own client, but that doesn't mean you'll get it from the losing party...
ReplyDeleteI am looking at it from a legal-costs lawyer perspective, but presumably the same principles would apply whatever area of law the case falls into.