The changes, proposed by the Office of Fair Trading (OFT) last week, involve a call for more private representative actions to take place, partly by allowing larger success fees to encourage more firms to pursue competition claims.
Currently, firms are only able to recover a 100% increase in fees from the losing party if the case is successful. This is cited as a major deterrent to large
The OFT suggests the amount should be increased and that the additional fees should be paid from the damages recovered. In addition, if the claimants lose then their costs would be capped.
David Greene, head of litigation at group action specialist Edwin Coe, welcomed the idea. He told Legal Week: “Due to the complex and difficult nature of competition cases, 100% uplift may not be enough to attract lawyers, therefore measures are needed.”
However, Clifford Chance competition partner Elizabeth Morony was less upbeat, saying: “This would bring us perilously close to the
“The worst-case scenario combines higher conditional fees — or even no win, no fee — with representative actions on behalf of unnamed claimants and limited costs consequences.”
Linklaters head of advocacy Mark Humphries said: “With contingency fee agreements the lawyer is paid out of the damages; with conditional fee agreements (CFAs) he is paid his base costs and a percentage on top, which are both recoverable from the losing defendant. This strange proposal seems to be a bit of both. It seems a very ill thought-through halfway house which mixes up the concepts of CFAs and contingency fees.”
The proposals are part of an OFT consultation on private actions in competition cases, which is open to responses until 13 June and follows a European Commission Green Paper in December 2005 focusing on competition law.
A workshop on the issues involved is expected to be held in October, after which the OFT is expected to make recommendations to the Government.
The OFT wants to encourage actions similar to a multimillion-pound group action in January that saw consumers seek compensation from retailers such as JJB Sports, AllSports and Umbro that were held to have illegally fixed the prices of replica football shirts. Clyde & Co is representing the claimants.