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    Tuesday, 30 March 2010

    Politically motivated (?) 10% CFA success fee order gets rocky ride

    In January, the Ministry of Justice opened a consultation on the imposition of a 10% cap on the recoverable success fee for CFA-funded libel claims. This consultation closed some 4 weeks later. It culminated, with what might be considered impressive rapidity, in the presentation to Parliament in early March of a statutory instrument (the Conditional Fee Agreements (Amendment) Order 2010, made under section 58(4) of the Courts and Legal Services Act 1990) designed to put the policy change into effect.

    Interestingly, two weeks ago the House of Lords Merits of Statutory Instruments Committee drew 'the special attention of the House' to the measure, noting, "we regret that insufficient time has been allowed to produce a solution based on more robust evidence or on which there is broad agreement, and that might seem more likely to achieve the policy objective without the potential side effects". The Committee was worried about the haste with which the measure had been concocted, and noted that several other options on the table had been for some reason discounted.

    The Committee received a number of persuasive contributions questioning the legitimacy of the order - included in an appendix to their report - from such figures as Nicholas Green QC (Chairman of the Bar Council), Carter Ruck Solicitors, the Law Society, Professor Richard Moorhead of Cardiff University (who has conducted an important scoping review of CFAs in the defamation and other contexts for the MoJ), and Which? (welcoming the change).

    The Carter Ruck submission noted the "widespread concern within the legal profession that the proposed reduction in success fees would seriously reduce - if not eliminate altogether - the rights of ordinary individuals without substantial means to obtain access to justice in defamationa nd privacy cases". Professor Moorhead concurred: "I am aware of no objective evidence base from which the Government could draw its calculations for the 10% fee beyond that provided by those lobbying for one side or the other in the debate... without persuasive evidence to support it the basic economics of conditional fee agreements would suggest that at a level of 10% uplift would prevent all but the most meritorious cases from proceeding on a conditional fee. For rich litigants, this presents no problem, for poorer litigants this presents a major impediment to access to justice".

    In light of all these representations, a motion of regret was subsequently raised by Lord Martin (the former Speaker of the House of Commons), requiring the Order to be debated on the floor of the House of Lords. This was duly done last week, with the result that Lord Martin withdrew his motion. The debate was very noteworthy, however, for the contributions offered by Lords Martin, Woolf, Scott and Pannick.

    By way of aside, a lawyers' group has threatened to seek judicial review of the government's decision to introduce the new 10% cap on the basis, inter alia, that insufficient time was allowed for consultation, and that the government failed properly to take account of the impact on access to justice

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