A report seen by The Times supports the adoption of US-style contingency deals in which lawyers take their fees out of damages won for clients.

The report, sent to the country’s most senior civil judge, Sir Anthony Clarke, the Master of the Rolls, says that there is no evidence that such deals give lawyers an improper motive to settle claims early or that they promote frivolous claims.

Lawyers in the US who act on contingency fees typically take 33 per cent of the damages won.

The report, to be published this week by the Civil Justice Council, a senior forum of judges, lawyers and other civil courts users, coincides with the hearing of Jim Beresford and Douglas Smith before the Solicitors Disciplinary Tribunal.

Concern is growing over the multi-million-pound trade in which thousands of solicitors make confidential payments to obtain work. Such payments are lawful but solicitors are required to inform clients of the details and these rules are being widely flouted. A total of 67 firms are or have been investigated. So far, 25 firms have been referred to the tribunal in connection with miners’ compensation claims.

The report by the Civil Justice Council also comes amid concern about the huge costs being generated by no-win, no-fee agreements. These differ from full-blown US-style contingency fees in that lawyers cannot take their fees out of the damages awarded to their clients. Instead, if they win the claim, lawyers are allowed to increase their fees by up to 100 per cent.

The Master of the Rolls has already said that “the time may be coming when some form of contingency fee will be seen as desirable in England and Wales”.

The report, by the senior costs judge, Peter Hurst, and Richard Moorhead, of Cardiff University, says that although further study of contingency fees is needed – and the US or Canadian systems could not be imported wholesale – there is “considerable confidence that a contingency fee system in England and Wales is viable”. It adds, however, that the move could lead to “a diminution in overall levels of access to justice for claims where the main remedy is compensation” because lawyers would be less able to take on borderline cases.

Contingency fees would provide a “cleaner and less complicated model for England and Wales” and eliminate the vast majority of litigation based on challenges over legal fees.

It also notes that “there is surprising absence of evidence of consumer disquiet about contingency fees”. Letters, page 27

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