Analyze the Advantages and Disadvantages of Conditional Fee Arrangements for Legal Aid

Topics: Contingent fee, Lawyer, Plaintiff Pages: 5 (1736 words) Published: May 2, 2011
Essay Title:



Conditional Fee arrangements was introduced as an attempt to transfer legal funding from the treasury to the private sector. Before starting discussion of the advantage and disadvantage of conditional fee arrangement for legal aid we better to give a look what Conditional Fee arrangements is ---------

Conditional Fee Arrangement is an agreement whereby a lawyer and a client can agree to share the risk of the litigation by coming to a financial arrangement on the fees payable based on the outcome of the litigation. "No win, no fee" - in the event of losing the client will not be liable to pay any fees to his lawyer, but if the case is won "normal" costs are payable . "Shared risk" - in the event of losing the client pays a reduced fee to his lawyer, but in the event of winning the lawyer will be entitled to "normal" costs .In both instances a success fee can be charged in addition to the "normal" costs. The success fee should be payable by the other party if the client wins.

First we concentrate on the disadvantages--
From the defendant perspective the one-side cost shifting is a big disadvantage. If the defendant loses the case and failed to do BTE(Before the Event Insurance) then it seems to be burdened with high legal costs from the other party[1]. What is worse is that he also has to pay the other party’s success fee, which means he could be pay almost double of the normal fee. This is really unfortunate or not fair to the defendant[2].Moreover the defendant cannot control the legal costs of the other party and this could be abused. Statistics have shown that the market for BTE is still very premature and hence defendants ending up bankrupt as a result of Conditional Fee Arrangement are a reality[3].

While there has been much judicial consideration of various aspects of conditional fees, there remains considerable uncertainty as to the position in respect of a number of important issues. Most problematic, it seems, are the ATE(After the Event Insurance)premiums, especially as to the appropriate amount of ATE premiums. A further difficulty arises where there is pre-existing BTE insurance. There may then be a dispute as to whether the claimant should have relied on the defendant’s BTE insurance instead of taking out his own ATE insurance. The decision turns on whether the pre-existing BTE cover is “satisfactory” for a claim of that particular size.

Next, we look at the former aims of Conditional Fee Arrangements. Conditional Fee Arrangements were meant to help those who were too poor for legal advice but failed the means test for legal aid. Recent cases such as Campbell v Mirror Group Newspapers Ltd[4] have seemed to imply that Conditional Fee Arrangements are available to just about anyone. This issue was brought up in the London Seminar as they said that for “Hollywood actress Sharon Stone, footballer Ashley Cole, supermodel Naomi Campbell… none of these were seen denied justice on financial ground”[5]. While this does not seem to bring about any problems since it is still applied as a Conditional Fee Arrangements, what we are introducing is a whole new culture of people who tries to take advantage of a no-risk system to earn a quick buck. In the case of Campbell, Naomi sued for breach of confidence, and earned £3500. To note this case, it was also “mortifying to find that… they (MGM) were made to pay legal costs in the sum of £1,086,295.47”[6].

Looking at the efficacy of the Conditional Fee Arrangements also brings shivers down one’s spine. While it is meant to provide claimants an avenue to seek compensation so that they can use the damages awarded to resume their daily lives or seek medical treatments, most of them end up having to pay for medical fees by themselves. Statistics...
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