Fix or twist?

Important issues concerning the suitability of the current fixed success fee regime for asbestos disease claims were raised recently by Andrew Morgan in Solicitors Journal ('No quick fix', Solicitors Journal 153/47, 15 December 2009). The article was written from a claimant perspective and merits a response from a defendant point of view.

The main thrust of the article was that fixed success fees in asbestos claims do not work because of the recent challenges made by insurers, particularly since pleural plaques was ruled not to be a compensatable injury. The success fee of 27.5 per cent became too low once pleural plaques claims were removed from the pool of cases and nobody knows what the future may hold.

When the current regime was mediated, a single success fee was agreed for all types of asbestos claim. This suggests that it was considered that there was little or no difference between the prospects of success between different types of asbestos claim. A desire for simplicity of the scheme would not alone have been a sufficient explanation.

It is possible that removing pleural plaques claims from the pool has altered the prospects of successfully running this type of claim. But it is pure speculation as to whether this has meant 'the appropriate level of success fee changes dramatically' in the absence of any statistical evidence, and Mr Morgan does not point to any. Recent challenges may well be a reason for further statistical analysis, but not a reason to scrap fixed success fees entirely.

Mr Morgan proposes a return to assessment of success fees by the courts. Although, as a costs professional, I would wholeheartedly welcome a return to uncertainty in this area and the corresponding increase in satellite costs litigation, I find it surprising for a claimant lawyer to be seeking such a solution. The reason fixed success fees were introduced was to bring some certainty into an area that was little more than a lottery.

Accurate assessment?

The justification put forward for a return to variable success fees is the claim that 'expert practitioners assess risk in asbestos disease claims using years of experience'. This assumes that past experience is any guide to future prospects of success. However, Mr Morgan appears to deny this when he says there 'was a glaring flaw in looking at historic data to assess success fees'. If historic data is of no assistance when considering current success fees, why would the experience of individual lawyers be more likely to produce correct figures?

It also assumes that individual risk assessments produce accurate and appropriate success fees. There are two problems with this. What objective method is there to assess whether a case has a 50 per cent or 60 per cent chance of success? Second, it assumes that lawyers will produce risk assessments that are designed to genuinely reflect the prospects of success. In reality, these are self-serving documents produced with one intention: to persuade a judge on assessment to allow as high a success fee as possible.

Mr Morgan refers to the views expressed in the case of Callery v Gray [2002] UKHL 28. It is worth recalling the facts in that case when considering whether the courts are properly equipped to assess success fees. The case concerned a straightforward, low-value RTA. The firm of solicitors that acted for the claimant assessed the success fee at 60 per cent (so much for 'expert assessments'). A success fee of 40 per cent was allowed at first instance and at the initial appeal. The Court of Appeal reduced this to 20 per cent. Shortly afterwards, in Halloran v Delaney [2002] EWCA Civ 1258, the Court of Appeal revisited the issue and decided that henceforth success fees of five per cent would be appropriate for this type of case. The decision was met with howls of anguish from claimant lawyers. On which occasion, if any, had the court got it right?

Mr Morgan relies on 'any number of SCCO decisions' as evidence that fixed success fees do not reflect 'practitioners' expert assessments'. The fact that costs judges in the SCCO may have historically allowed success fees in excess of those allowed under the fixed success fee regime hardly amounts to empirical evidence that the figures were fixed at too low a level.

No change

Lord Hoffmann, in Callery, observed when considering the problems costs judges faced when assessing success fees: 'I rather doubt whether difficulty is likely to be removed merely by the passage of time. All that costs judges will learn is what other costs judges are allowing. Solicitors will charge whatever is currently allowed and exert upward pressure to be able to charge more. But that will not tell anyone whether the fees paid to the solicitors represent reasonable value for money.' Nothing has changed since then.

Mr Morgan claims that fixed success fees should be scrapped 'to protect asbestos claimants' access to justice. Such access to justice hangs by a thread.' This claim does not sit entirely comfortably with a press release from Mr Morgan's firm, Field Fisher Waterhouse, which stated that their asbestos team recovered record damages in 2008 for asbestos victims. Further, so long as claimant solicitors are prepared to pay significant referral fees for this type of claim, there is little sign that asbestos victims will be unable to find solicitors willing to act for them.

His conclusion is that 'objective, scientific, evidenced-based assessment of future risks is impossible' in asbestos claims. That is hardly an argument in favour of allowing purely subjective, arbitrary and unreasoned levels of success fee.