In personal injury matters, the pursuers/plaintiffs expect 'no win, no fee' or contingency arrangements and defenders/defendants, in particular insurance companies, look for set costs per stage (or even per case). Fixed fees have been standard in property matters (both residential and commercial) for some time and most other areas of legal practice appreciate that clients want clarity in their feeing arrangements and so seek to address this in a variety of ways.These discussions which take place between lawyer and client may now, however, be forced on a different field of professional practice - insolvency - by the Government. Westminster has recently published a paper proposing two significant reforms to the way insolvency practitioners (IPs) operate.The first is a collection of reforms aimed at shaking up the regulation of IPs (currently spread through eight regulatory bodies but, in the Government's eyes, little industry-wide oversight and intervention in the event that the regulator is seen to be failing in general, or in a specific case). The most wide-ranging proposal is that there should be a reserve power to Westminster to seek to replace all the regulators (commonly referred to as Recognised Professional Bodies or RPBs) with a single Government-appointed regulator. Even if this power does not come in, how the RPBs operate looks likely to be reformed.The second change, and perhaps the more headline grabbing, is that IPs must stop charging on a "time and rate" basis (that is, on the basis of hourly rates, also called "time and line"), leaving only two feeing options; a fixed fee agreement with creditors, or payment based on a percentage of assets realised. The fee reform proposal is, however, slightly less wide-ranging than it first appears. In regards to jurisdiction, the reforms will not apply in Scotland as, in Scottish insolvencies, if there is no agreement with creditors or a creditors' committee, the IP has to proceed to court for approval of fees and outlays (normally with the court appointing their own expert "reporter" to consider matters). In the case of bankruptcy in Scotland (sequestration), a Government department, the Accountant in Bankruptcy, already takes the place of the court in auditing and assessing fees and outlays. (Northern Ireland is similarly excluded from the proposed reforms due to their own insolvency regime.)Secondly, England and Wales already have a set of set percentage fee arrangements for compulsory liquidations and bankruptcies (that is, those through the courts) and it is not proposed to alter these. Thirdly, there is a recognition within that individual cases may have a selection of fee arrangements. There may be a fixed fee for core work, a percentage fee for the recovery of certain sorts of assets, and a different percentage fee for recovery of other types. There is also an acceptance that time and line work should be preserved for complex recovery work, such as challenges against directors, or matters requiring involved forensic accountancy.Finally, it is proposed that time and line feeing remains available to IPs where there is significant creditor involvement, and therefore some external involvement in controlling and monitoring the level of fees being charged. The two areas identified by the Government as having such creditor involvement are cases where there is an active creditors' committee and those with a secured creditor (such as a bank) who has taken steps to agree a fee arrangement with the IP at the outset of the case.It is this final point that informs the whole consultation regarding fees. Further to a report by Professor Elaine Kempson in 2013, the Government has a concern that there is insufficient oversight of IPs' fees as there is insufficient ability of creditors to ascertain likely costs and return to creditors during a case or take action to control fees. This leads to the conclusion that this lack of oversight means that sometimes fees are too high and creditors lose out.Clearly, the consultation period under the proposals (closing on 28 March 2014) will result in significant involvement by IPs, institutional creditors and the legal profession, especially in England and Wales. There are some gaps within the proposal as they stand. It is proposed that there will be fall back to a set percentage recovery fee scale whenever creditors and the insolvency practitioner cannot agree. It is difficult to see a situation why, if the only fall back is to a statutory set of fees, creditors will agree a fee arrangement more generous than the statutory basis or IPs would propose anything less than the statutory set of fees.Further, it is hard to see how the proposals are meant to deal with outlays. If there is significant legal work or involvement of specialist valuers, these outlays may be quite high and, in a small insolvency, may represent a significant percentage of the liquidation costs. Further, if forensic accountancy work is required, large firms with in-house forensic teams might find that they see their fees have to be included in the general insolvency fee arrangement, whereas smaller firms who contract-out such work might be able to charge it as an outlay.The significant difficulty with IPs' fees is that the IP has no single 'client'. The IP is there to represent the interest of creditors as a whole. In cases where there is a clear vanguard of creditors (either a creditors' committee or an active secured creditor), the Government accepts that they will provide oversight on feeing and the IP will be permitted to propose time and rate fees. In all other situations, the Government's view is that there has to be some statutory basis for the fees as otherwise creditors struggle to exert control.In the legal profession, we have to know who our client is for all manner of reasons. At Morton Fraser, we seek a discussion on costs and fees with our clients, both at the outset of the relationship and throughout each matter, so to that extent, the Government's consultation on IP fees is just a further example of how important it is for all professional advisers to have these types of discussion.The legal profession has long since accepted that when their clients speak, they speak with the weight of market forces behind them. With these proposals the Government is suggesting there are some professions where the voice of the market is not quite as strong but still requires the same confidence and clear discussion on fees.