Web Journal of Current Legal Issues, refereed article, first published 23 February 2001.

Peysner, ' A Revolution By Degrees: From Costs to Financing and the End of the Indemnity Principle..' [2001] 1 Web JCLI
<http://webjcli.ncl.ac.uk/2001/issue1/peysner1.html>

A Revolution By Degrees: From Costs to Financing and the End of the Indemnity Principle.
Professor John Peysner
Centre for Legal Research, Nottingham Law School
Nottingham Trent University
john.peysner@ntu.ac.uk

 “Mark Twain …., when tweaked by a lawyer on the after-dinner speaking circuit at the end of the last century, was able to retort that he was interested to hear Joe Hinkenlubber III addressing the audience with his hands in his pockets because that was the first time he had seen a lawyer with his hands in his own pockets” Edward Garnier MP (1999)

© Copyright 2001 Professor John Peynser
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary
This article examines a reform programme which has produced, in a not altogether predictable way, a revolutionary shift in the economic base of that substantial proportion of the legal profession that earns its living from litigation and resolving disputes. It examines a change in which the lawyer-client relationship, which was predicated on professional and objective advice, paid for by clients, is increasingly being transformed into an investment model where lawyers put their own money and time into their clients’ cases, with profound implications for the organisation, ethics and future of the profession. 

In economic terms, most litigation lawyers are changing from being a service profession, charging clients for that service (part of which was to recover costs from the loser and account for these to the clientas a discount against fees charged to the client) to being venture capitalists investing in a chose in action offered by clients who do not expect to pay legal fees in any event. These new lawyers live on recoverable fees: they eat what they kill and recovery of costs takes its place in a matrix of considerations about how to finance litigation.

These changes are having dramatic effects on the economic and professional organisation of the legal profession and its ethics and standards. Whilst being aware of the overall social and economic context (Peysner, 2001) this article will concentrate on the narrower issue of the historical and policy development behind these changes and the way in which the indemnity principle  central to the English Rule on costs recovery  is breathing its last gasp.

Contents
Introduction
Back to Basics
The Indemnity Principle
The Indemnity Rule and Costs Recovery
The Indemnity Rule in Financing Litigation
The Indemnity Principle Comes Under Attack
The Employed Lawyer
The Organisation Lawyer
The Legal Aid Lawyer
The Indemnity Principle Retreats
Conditional Fees
The response of the Common Law: Marching Up to the Top of the Hill and Marching Down Again
Conditional Fees and the Access to Justice Act: from Gradual Change to a Big Bang
Can and Should the Indemnity Principle Survive?
i) The problem of winners
ii) The Block Conditional Fee Client
iii) The Prospect For Fixed Fees
Conclusion
Bibliography.

Introduction
Why is the subject of costs and the financing of litigation in England and Wales of so little interest to civil proceduralists? Scholarly articles on general cost issues are extraordinarily rare (Goodhart, 1929). Part of the reason is that the basic costs and financing matrix – the ‘English’ rule of fee recovery and its necessary concomitants – has been essentially fixed for over a hundred years. Thus, the examination of costs has largely been restricted to devotees of its more arithmetic and arcane aspects. Solicitors, and to a greater extent, barristers and, to an even greater extent, judges, have been surprisingly ignorant of the underlying financial basis of civil litigation. Scholars, with some notable exceptions, have regarded it as a no-go zone. Not any more: costs are no longer boring. Changes in the economic and procedural background to dispute resolution have re-engineered the dry study of costs into the vital science of financing litigation and the study of the way in which policy and procedural objectives can be mirrored by the money. In this change the indemnity principle has been the lightning rod.
Back to Basics
In 1929, Arthur Goodhart delineated for an American audience the basic principles of costs. He described the rising tide of cases on the assessment of costs and how the English rule began to develop (see Walters and Peysner, 1999) in the early Middle Ages. By the time the Supreme Court was created in the 1870’s, the cost rule was recognisably in its modern form: 

“Rule 1. Subject to the provisions of the Act, the costs of and incidental to all proceedings in the High Court shall be in the discretion of the court…; Provided, that where any action or issue is tried by a jury, the costs shall follow the event, unless upon application made at the trial for good cause shown, the Judge before whom such action or issue is tried, or the Court, shall otherwise order”.

What is surprising about Goodhart’s article is that amongst the wealth of detail presented about the way in which costs are recovered (the taxation process, now called assessment) and the limits of cost recovery (the discretion retained by the court), it entirely ignores the underlying principle behind the English rule – the indemnity principle.
The Indemnity Principle
The indemnity principle is normally simply described as a rule that says: “if you lose, you will be responsible not merely for your own legal costs but you must pay the other side’s too. This is the so-called costs indemnity rule” (see Andrews, 1994). In the context of what follows, the principle is split into two aspects, the first of which has been relatively unproblematical, the second the source of great difficulty.
The Indemnity Rule and Costs Recovery
This rule, based on statute, section 51(1) of the Supreme Court Act 1981, states that ‘the costs of and incidental to all proceedings in the court of Appeal (Civil Division), the High Court and any County Court ‘shall be in the discretion of the court’ and that the court shall have ‘full power to determine by whom and to what extent costs are to be paid’ (Section 51(3)). This general discretion is particularly fettered by Part 44.3 of the Civil Procedural Rules which confirms the previous practice that costs should follow the event; the loser pays the winner; the English rule.

As Scott describes it (Scott, 1995) “…the ‘loser’ in legal proceedings is obliged to indemnify the ‘winner’ in relation to the costs occurred (sic) by the winner in, as the case may be, bringing or defending proceedings. It is for this reason that the rule may be described as the ‘indemnity rule or principle’. The principle justification for the indemnity rule is that it makes the winning party whole.
The Indemnity Rule in Financing Litigation
The second, and considerably more difficult, aspect of the indemnity rule is its influence on the funding of litigation. To understand this aspect it is necessary to revisit the trite observation that lawyers, under their professional cloak, have immediate and pressing financial objectives. Whilst judges are paid by the state as a public service and not yet wholly or mainly by court fees or renting the court for a trial and barristers are paid by solicitors, solicitors are paid by clients.

Whilst individuals and corporate entities can litigate in person, most litigation is conducted by solicitors on behalf of clients on terms of engagement reduced to a contract and policed by rules of practice. This has two important implications. Firstly, inability to pay one’s solicitor before, during or at the conclusion of the case (as appropriate) will mean that the solicitor will decline the instructions. Thus, payment, or promise of payment, to the solicitor becomes part of the price of entering into the litigation battle. Secondly, in what, for this discussion, is now the most important aspect of the indemnity principle, the costs cannot be recovered under the normal ‘loser pays’ principle unless there was an initial obligation to pay the client’s own solicitor: ‘Because of the ‘indemnity’ principle the successful party is not entitled to recover more inter partes than he is liable to pay his own solicitor  his right is to be indemnified wholly or partly against the costs actually incurred in bringing or defending the proceedings and no more’ (Greenslade, 1999). Without such an obligation there is no indemnity to be satisfied. This is then a mirror image of the first aspect of the rule, ‘the loser pays’ principle.

By the nineteenth century this principle was well developed. Harold v Smith [1860] 5 H & N 381 (English Reports 157 Exchequer at p. 1231) established that “costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained…the principle is this  find out the damnification and then you find out the costs that should be allowed”.

This case was followed in what is now the leading case of Gundry v Sainsbury [1910] 1 KB 645. The facts of the case are instructive and may well illustrate a dilemma of contemporary relevance. The plaintiff was a labourer who was bitten by a dog. He was successful at trial and costs would normally follow the event. However, during cross examination he asserted that he could not afford to pay costs and accordingly his solicitor had agreed to act for no fee. It follows that there appeared to be no damnification to be indemnified against and no costs could be recovered. An application by the solicitor to give oral evidence about the terms of the engagement (which had not been reduced into writing) was refused on the basis that under section 4 of the Attorneys and Solicitors Act 1870 such terms had to be written to be enforceable. The effect of this technical approach was that it is not possible to tell from the law report what the true circumstances were. The client may have simply misunderstood the basis of the arrangement. Alternatively, the case may be an example of pro bono instructions with the lawyer acting for charitable motives: never intending to charge the client and indifferent to costs recovery. (This begs the question as to who paid the court fee and any other disbursements.) However, it may well be that, bearing in mind the lowly economic status of the plaintiff and the likely non-commercial practice of the solicitor, the defendant made the assumption that this was a speculative arrangement  no win no fee  and this explains the thrust of the cross examination. (As discussed below even if the solicitor was able to explain such an arrangement to the court it would not have assisted as the arrangement would probably have been unlawful). The indemnity rule is wide enough to cover the situation where a solicitor, absent an agreement not to charge a client, appreciates that for practical financial reasons there is no prospect of the solicitor ever being paid by the client.
The Indemnity Principle Comes Under Attack
The flowering of the indemnity principle was completely in sympathy with a nineteenth century liberal economics which contemplated equal economic actors who freely contract and then resolve disputes by deploying lawyers for whom they pay. In reality, as the above analysis of Gundry suggests, there were always poor clients looking for lawyers who would represent them without charge or at reduced fees. The increasing democratisation and complexity of society, together with the growth of rights, added to the ranks of individuals with claims to bring. For the purposes of the argument in this article the influence of the demand side is entirely matched by the supply side: a growing number of lawyers keen to earn their living by acting for the enfranchised population. This influences the central theme of the Janus-like nature of litigation costs: they are designed to offer a disincentive to launching litigation but also offer a financing system of a potential source of funds for the victorious party to use to pay his lawyer. 

On this economic analysis, solicitors need clients as much as clients need solicitors. Thus, solicitors will seek out and act for clients if they can and if they are paid so to do. Solicitors are not, in principle, concerned about the source of funding as long as it is adequate and acceptably secure. All depends on how risk averse the solicitor is. Thus, a solicitor might act for a company on a fee-paying basis but harbouring some doubts that the company will pay the bill when it is presented. (This could be regarded as an investment if the assistance secures the long-term survival of a grateful client or some of the bill is paid). But what if the solicitor knows that, for all practical reasons, the client will never pay his bill?

Such clients can be generated by the market (the assertive citizen wanting to defend rights), economic development, collective action or by statutory intervention. This century has seen a series of inroads into the indemnity principle as the classical model of the paying client comes under attack.
The Employed Lawyer
What about the lawyer who works for and is employed by the organisation that is litigating: the in-house lawyer? In Re Eastwood (deceased) Lloyds Bank Ltd v Eastwood and others [1975] CL 112 an opportunity arose to address this issue when considering what, if anything, could be recovered by a successful party in respect of the costs of an in-house lawyer. In principle the lawyer was employed in any event and irrespective of his deployment in the particular case. The Taxing Master took the view that it would be wrong to charge the losing party for any element above the basic overheads as this would represent profit appropriate to solicitors in private practice running businesses but not to the in-house lawyer. It might have been possible to extend this argument further by stating that as the in-house lawyer was deployed anyway it was theoretically difficult to demonstrate that there was any cost to be indemnified at all. The Court of Appeal sidestepped this argument. It stated that the indemnity principle was effective in this situation but should, in effect, be modified by an approach that pointed out the difficulties of disentangling the overhead and ‘profit’ element of an in-house legal department and making the presumption that, in the absence of special circumstances, payment of costs assessed by the court as reasonable would not infringe the indemnity principle. It is tempting to conclude that, henceforth, for good practical reasons the indemnity principle has no real meaning in this situation.
The Organisation Lawyer
The assertive citizen might assert his rights most efficiently by banding together with others in a variety of organisations including clubs and trade unions. What if a claim arose for that member which came within the aims and objectives of the organisation? A member of a motoring club or a trade union might wish to prosecute a claim utilising the services of a lawyer retained by the organisation. Who instructs the lawyer so as to establish the indemnity? Again, the courts sidestepped this problem in Adams v London Improved Motor Coach Builders Ltd [1920] All ER 340. In an action for wrongful dismissal the successful litigant was a member of a trade union which had referred the member to the firm of solicitors whose bill of costs was at issue. The losing defendant argued that the solicitors would look to the trade union rather than the client for their fees but as the union was not a party to the litigation it could not recover. Bankes LJ at page 343 stated: “When once it was established that the solicitors were acting for the plaintiff with knowledge and assent, it seems to me that he becomes liable to the solicitors for costs, and that liability would not be excluded merely because the Union also undertook to pay costs. It is necessary to go a step further and prove that there was a bargain, either between the Union and the solicitors, or between the plaintiff and the solicitors, that under no circumstances was the plaintiff to be liable for costs”. Adams was followed in R v Miller and Glennie [1983] 3 All ER 186. Thus, the fiction is that the client instructs the lawyer and establishes the indemnity but standing behind him is a supporter who will intervene to cover any shortfall. In reality, the member would never expect to pay but, absent any indiscretion on this point being reduced to writing, the fiction, again for good pragmatic reasons, has survived.
The Legal Aid Lawyer
Until recently much litigation for impecunious clients was conducted under civil legal aid. The state was prepared to go as far as supporting the legally aided client by securing the services of a solicitor but did not require the client to pay, and, indeed, debarred the client from paying the solicitor directly. A strict operation of the indemnity principle would prevent the client from recovering costs, and it would be hard to stretch the trade union fiction to cover such situations, but the Legal Aid Acts gave statutory power to the Legal Aid Fund to recover costs. This concession was not balanced – the losing legally aided client did not normally have to pay the winner’s costs. A further amendment to the indemnity rule was that the legally aided lawyer’s charges to the Legal Aid Fund were statutorily capped at a lower level than costs recoverable from the non-legally aided losing party.
The Indemnity Principle Retreats
This somewhat messy compromise  preserving the indemnity principle by a range of fictions established in case law and statute  suffered from two major difficulties as government policy in the 1980s moved towards market solutions. Firstly, how could demand-led legal aid be kept under control as the population became more assertive and emphasis switched from collective to individual rights in employment, health and the public arena? Secondly, how could lawyers be exposed to increased competition in a market setting? These preoccupations have remained remarkably consistent as administrations have changed so that it is often hard to tell from policy documents which Lord Chancellor is in command. 
Conditional Fees
The Civil Justice Review (1988), The Marre Report (1988), and the Royal Commission on Legal Services (1979) all considered whether a form of contingency fees might increase competition and widen access to lawyers. The most striking model available remains the USA which offers a contingency fee arrangement whereby the client pays no fee if the case is lost (and applies little or no contribution to the winner’s costs) and the damages are shared with the lawyer.

This issue was discussed in detail in the consultation paper ‘Contingency Fees’ (White Paper, 1989). The great difficulty in introducing such a scheme was perceived to be the danger of over-rewarding the lawyer and encouraging unnecessary litigation. This view reflected the common law pre-occupation with the prospect of rapacious lawyers instigating actions rather than merely being an objective and reactive service profession. The high spot of this approach was represented by Lord Denning MR who, in Wallersteiner v Moir (No 2) [1975] Q.B. 373, rejected the argument that a lawyer could be “remunerated on the basis of a ‘contingency fee’ that is, that he gets paid the fee if he wins, but not if he loses. Such an agreement was illegal on the ground that it was the offence of champerty”. Champerty’s twin is maintenance; supporting the litigation of others. The allegations against these twin evils (posed in similar terms in the Middle Ages as in current concern about the “litigation crisis”) is that lawyers, if given a chance, will stir up litigation in order to share in its fruits. This does not sit easily with a modern approach to rights and access to justice. However, it was felt that whilst the English rule was retained and judges, rather than juries, determined damages awards, a modest relaxation in the rules was appropriate.

The result of these deliberations was the Courts and Legal Services Act 1990 and the creation of a hybrid mechanism: the conditional fee. In outline this had three elements.

•	Normal costs not to be recovered from the client if the case was lost.
•	Normal costs to be recovered from the loser if the case was won.
•	A reward – the success fee – to be recovered from the client’s damages if the case was won. This reward was to be calculated by applying a multiplier of normal costs and not as a split of damages, thus avoiding the alleged worst aspects of a USA style contingency fee. 

On the face of it this created a huge breach in the indemnity principle – and inroads into the bars on maintenance and champerty: recovery of costs from the loser was not linked to an obligation by the winner to pay costs in any event. However, both in practice and in policy statements it was not suggested that the conditional fee system would be a revolutionary step. It was regarded as a useful adjunct to existing arrangements because legal aid was to continue. Further, and as has been demonstrated in Scotland, a speculative system solves only part of a claimant’s problem  paying for his own lawyer  whilst leaving him vulnerable to paying the other side’s costs. Additionally, there was a disincentive for a litigant who had a choice between legal aid and a conditional fee arrangement: under the former damages would, normally, be recovered intact, under the latter they would be reduced by the lawyer’s success fee.
The response of the Common Law: Marching Up to the Top of the Hill and Marching Down Again
During the period following the introduction of the Access to Justice Act 1999, but before the relevant sections were brought into force by way of regulation (Walters and Peysner, 1999) the continued survival of the indemnity principle appeared to be in doubt following two landmark decisions: Thai Trading v Taylor [1998] QB 781 and Bevan Ashford v Geoff Yeandle (Contractors) Ltd  [1998] 3 WLR 172. Thai Trading concerned a speculative agreement with no success fee in litigation, which at that time, did not come within the statutory scheme of conditional fee agreements. After winning the case the claimant applied for her lawyer’s costs. The Court of Appeal followed the zeitgeist and held, by analogy with the statute, that the evil of champerty had lost its power to shock and the common law could reflect these new conditions: the indemnity principle did not apply to litigation. This was followed in an amazing display of judicial activism by Scott VC in Bevan Ashford. The case concerned a conditional fee type arrangement with a barrister. The decision went further than Thai Trading in legitimising not only a ‘no win, no fee’ arrangement with a success fee but also one that applied in arbitration proceedings. 

This happy conjunction of common law and legislation did not last long. The common law having advanced, it retreated in Hughes v Kingston-Upon-Hull [1999] 2 All ER 49 and, in particular, Awwad v Geraghty [2000] 1 All ER 608. The Court of Appeal in Awwad found that Thai Trading was wrongly decided per incuriam the House of Lords’ decision in Swain v Law Society [1983] 1 All ER 598 which decided that a solicitor cannot act on a contingency fee basis as this would be unlawful under the solicitor’s practice rules which have statutory force and cannot be disregarded by the court. However, the second limb of the argument in the case is of more relevance to this article.  The court made it clear that contingency arrangements will be allowed only so far as parliament will allow: in an area of legislative advance it is not appropriate for the courts to be avant garde. The implicit effect of these decisions is to strengthen the indemnity principle in those areas not affected by statute.
Conditional Fees and the Access to Justice Act: from Gradual Change to a Big Bang
Conditional fees ticked along without creating a major change in the way in which lawyers did their work because they operated in parallel with legal aid. Faced with the choice between certain, if limited, fees through legal aid and the greater but uncertain reward of conditional fees with a success fee, lawyers, the paradigm of a conservative profession, largely stayed with what they knew. This left the Government in a policy dilemma as it was determined to cap and limit legal aid, first of all for personal injury cases which were seen to be the most appropriate for conditional fees as the assessment of risk was the simplest in these cases. This left the difficulty of ensuring that claimants did not lose the bulk of their damages in costs, insurance premiums and the success fee. The answer, promoted by groups representing personal injury lawyers and accident victims, was to allow both premium and success fee to be recovered from the loser as additional costs. The regime then introduced by the Access to Justice Act 1999 presented a revolution in costs and funding creating a comprehensive breach in the indemnity principle and a battering down of both maintenance and champerty. The new arrangements have five elements.

•	Conditional fees are available in virtually all caseswith or without success fees. Thus, purely speculative or discounted hourly rate arrangements in the commercial field, which offer lawyers their normal fee if they win but less or nothing at all if they lose, are lawful.
•	Legal expenses insurance is widely available. More importantly, ‘after the event’ insurance (‘AEI’) can be purchased after the cause of action emerges to protect against the insurable event of losing a case based on that cause of action. There are myriad products at varying costs and offering different cover but broadly they ensure that for payment of a premium the risk of paying the loser’s costs is removed or capped 
•	The success fee is recoverable from the loser, as is the premium. Arrangements are in place to allow the loser to challenge the success fee but not, in practice, the premium, which is regarded as a market-priced disbursement
•	The proceeds of an AEI policy can collateralise a bank loan to cover disbursements and stage payments to the lawyer.
•	Counsel, but not experts, may act on conditional fee agreements 

These changes were matched by the effective abolition of legal aid for personal injury cases and severe limits on other types of claims. For the vast majority of individuals the conditional fee now represents their first port of call when instructing a lawyer.
Can and Should the Indemnity Principle Survive?
It might seem that the ship of litigation financing has now reached a safe haven and no more reforms are required. In fact, the conditional fee scheme is appallingly complex and in this author’s view could be modified by contingency fee arrangements along US lines (see Peysner, 2001). In the meantime the vexed question of the indemnity principle remains across the whole field of litigation costs.

Section 31 of the Access to Justice Act allows for rules of court to limit or abolish the common law principle. At the date of writing no comprehensive changes have been made to the rule nor any proposal made by the Rules Committee or Government to abolish it. Does this matter? After all, litigation has bifurcated into a growing stream of conditional fee cases where clients do not pay, or pay less than the normal rate, if they lose, under the statutory scheme, and ‘ordinary’ litigation where clients agree to pay their own lawyers’ costs, pray to win and, further, pray that if they win they can recover a substantial part of their costs. Regrettably, the survival of the indemnity principle creates three areas of acute difficulty  the successful conditional fee client, the block conditional fee client and the prospect of fixed fees  and in these situations, as well as in the general nature of the relationship between client and lawyer, the indemnity principle exists merely as an irritant: a beached whale after the tide has rolled out.
i) The problem of winners
Does the indemnity principle continue in a conditional fee agreement? One argument is that the indemnity principle has no place in a conditional fee agreement, which is a creature of statute. This works well if the client loses but what if the client wins but does not recover all the costs? Conventionally, the client would then have to pay the difference to the solicitor under the indemnity principle (although many solicitors did not collect because it was bad marketing). Now the situation is more complicated.

a)	The unrecoverable success fee can be enforced against a client but only following a court order. The client can challenge enforcement using the same, presumably successful, arguments that the loser used.

b)	Are recoverable normal fees recoverable from the client? Presumably, if there is a contract (terms of engagement) between client and lawyer as the practice rules require, they are. What about an agreement between lawyer and client that, in the event of a win, un-recovered cost will not be charged? The importance of this is that clients want, and many law firms wish to provide, a genuine no win, no fee arrangement in any event. Explaining to a client that there is a theoretical possibility of charging them un-recovered costs simply introduces an off-putting and incomprehensible element into what should be a simple and straightforward exercise. The difficulty is that the straightforward approach of ‘no win, no fee’ may be good marketing but is a breach of the indemnity principle and, if spotted by the loser, on assessment (when the privilege against disclosure of terms of engagement is waived) could mean that the successful lawyer fails to recover any costs. This becomes a double blind – the lawyer cannot recover from either client or opponent – and represents a risk that could damage the business strategy of firms wishing to enter into this type of work and, in due course, access to justice for individuals.
ii) The Block Conditional Fee Client
Trade unions, motoring organisations and such like have continued to expand their legal services to members despite occasional sniping at the underlying basis of the arrangement between the member and the lawyer. In a post-legal aid world such arrangements have become central to government policy on access to justice. The result was the introduction of the block collective fee arrangements that allow individual members to be referred to solicitors who will act on a conditional fee basis without the elaborate contractual arrangements and incomprehensible explanations necessary before a valid agreement can be entered into between lawyer and client. However, whilst the indemnity principle remains it bedevils this arrangement just as much as non-collective engagements.
iii) The Prospect For Fixed Fees
The ‘Access to Justice’ Enquiry offered strong support for the introduction of a system of fixed fees (on the German model) or capped fees as a means introducing certainty into Fast Track costs. The Lord Chancellor has postponed a decision on this whilst gathering information about costs levels. If, as the author believes, fixed costs could be a valuable tool in reducing overall litigation costs then they would immediately conflict with the indemnity principle as it is possible that the client’s liability might be less than the fixed amount recoverable. Whilst, no doubt, legislation could cure this, the continued existence of the indemnity principle does constitute a bar to progress in this area and, if abolished piecemeal to underpin fixed costs, it would appear to remain as a flag with more holes in it than material.

It appears that the remaining case against abolishing the indemnity principle is that it is necessary to preserve it as a brake on overcharging. The argument is that assessing judges will not be able to determine a fair rate for recoverable costs between the parties unless they are able to take into account what the recovering client agreed in advance to pay to his own solicitor. This has been described as similar to medieval arguments about ‘angels dancing on the heads of pins’ (Litigation Letter 2000). In reality assessments have increasingly taken into account surveys of average costs on a regional basis  to reflect different cost bases  to which are added arguments about reasonableness and proportionality, the importance of the case to the client or public and its difficulty, all derived from the overriding objectives of the Civil Procedural Rules, which act as discounting or escalating factors.
Conclusion
Reform of the indemnity principle has been a continuous refrain from the consultation paper ‘Controlling Costs’ (1999) to the Conclusion Paper on Collective Conditional Fees (2000). It is time that the long and baffling existence of the indemnity principle, which has no place in the modern world of litigation based on risk management and sound business principles, was brought to a humane end by comprehensive abolition.

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