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Fixed success fees bare no relation to practitioners'
assessments of the overall risk in asbestos
disease claims and should be removed to protect claimants'
access to justice, says Andrew
Morgan.
This article first appeared in the Solicitors Journal on 15
December 2009.
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Lord Justice Jackson’s report on the funding of civil litigation is
due to be published in January. His recommendations must
protect the right of personal injury claimants to recover full
damages for their injuries, especially in cases of serious and
fatal injuries. How can we guarantee access to the courts for
those most deserving such access when the costs of taking a case to
a defended trial can approach or even exceed the damages being
claimed?
The Background
Lord Woolf, in Callery v Gray, called for
an evidence-based assessment of the risks of RTA claims, on
the basis that claimant lawyers, on average, should be paid for all
the work that they do, win or lose. He meant to address
concerns that CFA “additional liabilities” could exceed
damages.
Research was commissioned to calculate suitable
success fees for RTA, work accident and lastly industrial disease
claims. Success fees were set by the Rules Committee
following a series of mediations between both sides of the
industry.
For asbestos disease claims the “headline” success
fee of 27.5% reflected historic evidence but did not reflect
practitioners’ current assessment of risk. They had deep
concerns the insurance industry would continue to run "generic"
challenges and that the fundamental basis for any asbestos disease
claim would remain constantly under threat. They were
reassured by (1) an understanding that the claimant would be
entitled to seek an uplift where "generic issues" were at large
(but no such provision has yet appeared in the CPR), (2) the
expectation that success fee levels could be reviewed and (3) the
robust nature of the evidence obtained by Professors Fenn and
Rickman and their analysis of it.
Even so, there was a glaring flaw in looking at
historic data to assess success fees for the future when asbestos
cases were expected to become more risky and were expected to face
more and more novel and potentially devastating challenges from the
insurance industry.
And lo, what was predicted has come to
pass.
The Insurers’ Challenges: Barker, Trigger
Issue and Plaques
Since the mediation the Fairchild
principle was attacked vigorously by the insurers and was
overturned by the House of Lords in Barker. Without
statutory reversal from a sympathetic government terminally ill
claimants or their bereaved families would today be facing
almost intractable difficulties in securing full damages in
mesothelioma claims.
In the “Trigger Issue” litigation insurers now
challenge the entitlement of claimants to enforce judgment, so that
they will go uncompensated. A vast swathe of asbestos cancer
claims is now poisoned by an uncertainty that simply did not exist
at the time that Fenn and Rickman prepared their statistics.
The low success fee of 27.5% for asbestos claims
arises from the historically good rate of recovering
some compensation (but not necessarily
full compensation) in the many asbestos pleural
plaques claims which Fenn and Rickman studied. The House of
Lords has since ruled that such injuries (for injuries they are)
are not compensatable at all. If those claims are taken out of the
equation then the appropriate level of success fee changes
dramatically. It remains to be seen whether or not the
Government will overturn that decision, in response to public
pressure.
A Philosophical Aside?
Fenn and Rickman’s research strongly assumes that
the past serves as a good guide to the future. In RTA and work
accident claims that assumption was always valid and remains so. In
asbestos disease claims, uniquely, that assumption was always
contingent, and is now demonstrably false.
Expert practitioners assess risk in asbestos
disease claims using years of experience. Whilst we may be
optimistic about our skills and abilities we often perceive
considerable risk. This risk is then reflected in a
significant discount as to damages. This risk is the measure
used by counsel when advising clients, funding insurers and (in the
“good old days”) the Legal Services Commission as to the strengths
and weaknesses of a case. It is not, though, the basis upon
which the “fixed success fees” were arrived at. The
dissonance between the fixed success fees and practitioners’ expert
assessments of the overall risks (supported by any number of SCCO
decisions) is a running sore that urgently needs lancing.
Predictably Unpredictable
The fundamental principle underpinning Conditional Fee Agreements as a funding method
is that lawyers must be paid for all the work that they do, on the
average: the success fees in successful claims cover the costs lost
in unsuccessful claims. Lord Woolf proposed a mechanism whereby the
figure that achieves that aim (but no more) can be measured. That
mechanism does not work when the assumptions of predictability on
the large scale and uniformity over time are invalid. In asbestos
disease claims those assumptions are demonstrably false.
The Barker attack, the Trigger Issue
litigation and the Pleural Plaques decision all prove that an
objective, scientific, evidence-based assessment of future risks is
impossible. Uniquely, in asbestos disease claims fixed
success fees have been shown not to work. They should be removed
from the CPR without delay to protect asbestos claimants’ access to
justice. Such access now hangs by a thread, simultaneously
precarious and precious. Let us hope Lord Justice Jackson’s
recommendations, more than anything, protect the interests of the
most vulnerable.
Andrew Morgan is a partner in our
asbestos claims department. For more
information or if you believe you may have an asbestos related
claim please contact Andrew on 020 7861
4036 or email andrew.morgan@ffw.com