Lawclaim.net Blog

Background:

In 2001 this government bought in no-win-no-fee agreements and took away legal aid for all types of personal injury claims save for clinical negligence.

For many years it was believed that access to lawyers was restricted to those rich enough to pay privately, or those who would qualify for legal aid. The vast chunk of middle England was not able to hire a solicitor because they were considered far too expensive.

It was decided that to increase access to justice for all, legal aid should be abolished and a no-win-no-fee type of system brought in so that the very rich to the very poor, can hire a solicitor, without worry about their fees, as they will only have to pay them if their claim was successful. Where their claim is successful, they will recover these costs from the losing opponent, hence, at no cost to them.

Despite the introduction of no-win-no-fee, pressure grew on this government to reconsider the whole concept of retaining a solicitor on no-win-no-fee because as it had become very expensive for the losing parties.

In the majority of cases involving no-win-no-fee, the opponent is insured and therefore the huge burden of legal costs was borne by the insurance industry. The pressure from the insurance industry and also from the written media, who were subject to high value defamation claims, led the Ministry of Justice to appoint Lord Jackson to review the whole process of lawyers fees in litigation and what could/should be done to improve access to lawyers and reduce the expense to the insurance industry and the written media.

Jackson’s Review:

Lord Jackson spent a considerable amount of time, took written representations from those acting on behalf of members of the public, the legal profession, the claim management industry and the insurance companies. He also looked at other jurisdictions, including America, Canada, Germany and Australia to see whether we can learn from their system and revamp litigation funding.

It is a very lengthy report and in this article I shall simply cover five of the ten recommendations that he has made.

1. Success Fee:

As explained in our earlier articles, under the no-won-no-fee agreement, if you succeed you will recover the time that your solicitor spent on your file, together with a mark up known as “success fee”.

The insurance industry and those faced with large defamation cases, believe that the success fee is a windfall for lawyers and that this has made defending claims very expensive. Lord Jackson recommends that successful parties should not recover success fee but these should be covered from the successful claimant, but limited to no more than 25% of the damages recovered.

2. Legal Expense Cover:

Most personal injury and defamation cases are now pursued with the benefit of an insurance policy known as “legal expense cover”. The current rules allow the successful party to recover their premium from the opponent. The payment of the success fee and premium is considered by the insurance industry to have made defending claims very expensive.

Lord Jackson recommends that insurance premiums should not be recovered.

3. Costs Shifting:

If a Claimant loses his case, he should not pay the winners cost of defence. In order to facilitate no recovery of the success fee and the premium, he has introduced a concept that the losing claimant should not be required to pay a successful defendant’s costs. However, he suggested certain exceptions where the successful defendant should recover his costs if :

- the losing parties behaviour was unreasonable, or
- unjustified, or
- if the losing party’s financial responsibilities justified the making of an Order.

4. Increase in Damages

That general damages (claim for pain suffering and loss of amenities) should be increased by 10% to allow the successful claimant to pay some aspect of their lawyers fees (success fee).

5. Fixed Costs

Solicitors already recover predictable fixed costs on road traffic accident claims up to £10,000.00. Lord Jackson recommends that fixed fees should be expanded, not only to road traffic accidents, but all types of claims, including accident at work and in public places and that these should be extended to up to and including Trial.

These are, of course, only recommendations, and the current system will only be changed if these recommendations are wholly or partially accepted by the Ministry of Justice. This is under consideration and will depend upon who wins the next election.

For further information about lawyers fees, and how you can hire a lawyer on a no-win-no-fee agreement please contact Abdul Hafezi.