The Master of the Rolls, Lord Phillips, and the Lord Chancellor, Lord Irvine, are abandoning the indemnity principle. The decision was made late last year and they are now looking at how to implement it.
The indemnity principle states that the loser of a court action pays pre-set costs that the winner agreed to pay their solicitor at the start.
Experts have warned that discarding this principle could lead to dishonest solicitors increasing their costs if they win a case, which means costs could spiral.
However, it has been deemed necessary to abolish the principle because it conflicts with conditional fee arrangements (CFAs) which are conducted on a 'no win, no fee' basis so the clients cannot agree to pay anything at the start.
