We looked the other day at the problems that might arise post-Jackson trying to instruct counsel to act under a CFA if there is a 25% damages based cap on the success fee that must be split between the solicitors and counsel.
This might create a market for ATE premiums to cover own counsels’ fees for the small number of cases that go to trial, to ensure representation.
However, the ATE premium would now come out of the client’s final damages cheque, in addition to the 25% success fee cap. And, of course, there has been no suggestion that ATE premiums will be capped.
This would create the situation whereby if both solicitor and counsel act under CFAs, 75% of the client’s damages are protected (assuming the cap applies to both). However, if the solicitor acts under a CFA and the client needs to instruct counsel to act using an ATE policy to cover counsel’s fees, there is no corresponding cap on the total that may be taken from damages. It would be 25% (for the solicitor’s fees) plus an uncapped amount for the ATE policy.
We may see claimants losing much more than 25% of their damages with these funding changes.