Tweet
Lawyers face clampdown on 'no win, no fee'
Lawyers will no longer be able to get rich on the back of controversial ‘no win, no fee’ agreements under recommendations unveiled in a major legal review of the country’s civil justice system.
Law firms who aggressively chase personal injury and negligence cases have been widely criticised as “ambulance chasers”. But Lord Justice Jackson, an appeal court judge, said the current structure of so-called “no-win no-fee” agreements, also known as Condition Fee Agreements, was not benefiting the public and had to be reformed.
The current system was “the most bizarre and expensive system that it is possible to devise”, the judge said.
Currently, the losing defendants must pay the winning lawyers’ “success fee” and costly insurance premiums which can leave them with a total bill of four times the cost of the action.
Lord Justice Jackson recommended that instead lawyers should be paid out by the winning side, with success fees capped at 25 per cent of the total payout.
The changes would mean that solicitors would be incentivised to compete with each other on who would take the smallest share of their client’s payout, he said. To ensure that lawyers did not lose out financially after the changes, courtroom damages for “pain, suffering and loss of amenity” should increase by 10 per cent.
The move would save the taxpayer millions of pounds by cutting the costs of litigation. For example, in the past three years the cost of health negligence claims jumped by a third to £770 million.
In some cases, Lord Justice Jackson said, this meant that the legal costs far outstripped the level of damages paid out.
The judge cited one case when damages of just £1,000 were paid out, despite lawyers running up bills of £10,500. In another, £5,000 damages were paid out, although legal costs were more than £30,000. So-called “claims farming” companies should also be banned from selling personal injury cases to lawyers for a fee, he said.
He criticised the “escalation” of referral fees in ‘no-win no-fee’ cases paid to claims management companies since the introduction of the Access to Justice Act in 1999.
“The focus of our litigation process should be upon compensating victims, not upon making payments to intermediaries and others who have moved in recent years into the personal injury compensation process,” he said.
“The fact that such substantial referral fees are being paid illustrates that there is too much money swilling around in the personal injury compensation process.”
The radical proposals could also see a fall in spurious libel cases, leading to them being described as a victory for freedom of speech. Celebrities who win claims against newspapers and magazines would be forced to pay lawyers’ fees from their pay-out.
Lord Justice Jackson also suggested that more families should buy legal insurance to cover their costs in the case of “nuisance” rows with their neighbours.
Some home owners have been forced to sell their property to cover the crippling cost of action over petty rows.
Lord Justice Jackson also recommended that in class action cases judges should be allowed to rule that a losing side should not have to pay the other side’s costs if would “better facilicate access to justice”.
Lord Neuberger, the present Master of the Rolls who is the most senior civil judge, said: “Without action, costs will continue to spiral out of control and justice will be undermined, and the public interest severely affected.”
Lord Judge, the Lord Chief Justice, added: “The judiciary has been concerned for some time that the costs of civil litigation are disproportionate and excessive.”
The changes to the rules governing no win, no fee cases will require primary legislation. Copies of the report have been given both to Jack Straw, the Justice secretary and to Dominic Grieve, his opposite number at the Tories.
Mr Straw said the report was “a substantial, comprehensive and detailed report” and a “remarkable piece of work which is based on extensive consultation and puts forward a broad range of significant recommendations for reform”.
Susan Dunn, the head of litigation at Harbour Litigation, described the report as “a historic day for civil litigation and a big day for freedom of speech”, adding: “This is the end for ‘No Win, No Fee, No Cost’ for litigants.”
Lawyers will no longer be able to get rich on the back of controversial ‘no win, no fee’ agreements under recommendations unveiled in a major legal review of the country’s civil justice system.
Law firms who aggressively chase personal injury and negligence cases have been widely criticised as “ambulance chasers”. But Lord Justice Jackson, an appeal court judge, said the current structure of so-called “no-win no-fee” agreements, also known as Condition Fee Agreements, was not benefiting the public and had to be reformed.
The current system was “the most bizarre and expensive system that it is possible to devise”, the judge said.
Currently, the losing defendants must pay the winning lawyers’ “success fee” and costly insurance premiums which can leave them with a total bill of four times the cost of the action.
Lord Justice Jackson recommended that instead lawyers should be paid out by the winning side, with success fees capped at 25 per cent of the total payout.
The changes would mean that solicitors would be incentivised to compete with each other on who would take the smallest share of their client’s payout, he said. To ensure that lawyers did not lose out financially after the changes, courtroom damages for “pain, suffering and loss of amenity” should increase by 10 per cent.
The move would save the taxpayer millions of pounds by cutting the costs of litigation. For example, in the past three years the cost of health negligence claims jumped by a third to £770 million.
In some cases, Lord Justice Jackson said, this meant that the legal costs far outstripped the level of damages paid out.
The judge cited one case when damages of just £1,000 were paid out, despite lawyers running up bills of £10,500. In another, £5,000 damages were paid out, although legal costs were more than £30,000. So-called “claims farming” companies should also be banned from selling personal injury cases to lawyers for a fee, he said.
He criticised the “escalation” of referral fees in ‘no-win no-fee’ cases paid to claims management companies since the introduction of the Access to Justice Act in 1999.
“The focus of our litigation process should be upon compensating victims, not upon making payments to intermediaries and others who have moved in recent years into the personal injury compensation process,” he said.
“The fact that such substantial referral fees are being paid illustrates that there is too much money swilling around in the personal injury compensation process.”
The radical proposals could also see a fall in spurious libel cases, leading to them being described as a victory for freedom of speech. Celebrities who win claims against newspapers and magazines would be forced to pay lawyers’ fees from their pay-out.
Lord Justice Jackson also suggested that more families should buy legal insurance to cover their costs in the case of “nuisance” rows with their neighbours.
Some home owners have been forced to sell their property to cover the crippling cost of action over petty rows.
Lord Justice Jackson also recommended that in class action cases judges should be allowed to rule that a losing side should not have to pay the other side’s costs if would “better facilicate access to justice”.
Lord Neuberger, the present Master of the Rolls who is the most senior civil judge, said: “Without action, costs will continue to spiral out of control and justice will be undermined, and the public interest severely affected.”
Lord Judge, the Lord Chief Justice, added: “The judiciary has been concerned for some time that the costs of civil litigation are disproportionate and excessive.”
The changes to the rules governing no win, no fee cases will require primary legislation. Copies of the report have been given both to Jack Straw, the Justice secretary and to Dominic Grieve, his opposite number at the Tories.
Mr Straw said the report was “a substantial, comprehensive and detailed report” and a “remarkable piece of work which is based on extensive consultation and puts forward a broad range of significant recommendations for reform”.
Susan Dunn, the head of litigation at Harbour Litigation, described the report as “a historic day for civil litigation and a big day for freedom of speech”, adding: “This is the end for ‘No Win, No Fee, No Cost’ for litigants.”
