No win, no fee. But will justice be the loser? with 'no win, no fee'?
Opponents fear that conditional fees could lead to US-style litigation bonanzas
Wednesday 05 July 1995
Conditional fees are part of the Lord Chancellor's strategy on funding legal services. Their introduction has been strongly opposed by the Bar Council, senior judges and others, who believe they could lead to conflicts of interest between lawyers and clients and to American-style litigation bonanzas. The proposals were approved by the House of Lords last month by only a narrow majority. The Lord Chief Justice, Lord Taylor, called conditional fees "an alien creature in our justice system".
There are those who object to the principle of conditional fees and others who are opposed to elements of the scheme. Those in favour of the arrangement, such as the Law Society, stress the difference between conditional fees and the contingency fee arrangements used in the United States.
On a contingency basis, a lawyer winning a case receives a percentage of the damages awarded to his client. Under the scheme being introduced here, the lawyer receives his usual fee plus a percentage uplift, or "success fee". In practice, however, this will come out of the damages, and has been called a distinction without a difference.
The limit of that success fee - the proposals allow a 100 per cent uplift, ie the successful lawyer may charge double his usual fee - is what has exercised the objectors to detail. Lord Ackner, a former Law Lord, tabled two amendments to the conditional fee proposals in the House of Lords, saying that, as they stand, they will lay clients open to exploitation. He proposed either a restriction of the uplift to 20 per cent or a cap on the proportion of the damages the lawyer can take. The amendments were defeated by just five votes.
The Law Society, which is enthusiastically embracing conditional fees, is recommending a 25 per cent damages cap to solicitors. But it maintains its support for the 100 per cent maximum uplift, which it says is necessary for it to be financially viable for solicitors to take on cases with a 50-50 chance of success. The society stresses in its guidance to solicitors, however, that the uplift in an individual case should be proportionate to the risk involved: 100 per cent is the maximum, not the standard, amount.
For the time being, conditional fee arrangements will be restricted to personal injury claims, European human rights cases and insolvency. In combination with an insurance scheme being introduced by the Law Society, it will mean that people ineligible for legal aid will for the first time be able to sue without financial risk.
According to the society, only a quarter of the 3 million people who are injured every year in accidents consider making a claim for compensation. The majority are deterred by the cost. Even with a conditional fee agreement, unsuccessful litigants would still be liable for costs in the shape of the winning side's legal fees, expert witnesses' fees and court costs. The society is introducing an insurance scheme, with a one-off premium of under pounds 100 to cover these expenses. This insurance - Accident Line Protect - will run in conjunction with the society's Accident Line scheme, in which a free telephone helpline puts accident victims in touch with specialist personal injury solicitors who offer a free initial consultation.
Apart from the removal of anxiety about cost, the Law Society says that conditional fees arrangements have the additional benefits of first demonstrating a solicitor's confidence in a case and second, acting as an incentive for him or her to pursue a claim effectively.
The society plays down fears that "no win, no fee" will lead to excesses following the US model. For one thing, it says, the characterisation of the US system as one where juries set astronomical damages from which lawyers reap equally high fees is a distortion of reality. Huge damages that hit the headlines are sometimes awarded, but frequently reduced later by a judge, and such cases are often "misreported and misunderstood".
In the notorious McDonald's "coffee spill" case, for instance, in which a jury awarded a woman scalded by coffee $2.7m damages, the plaintiff was in fact disabled for two years as a result of her injuries. Evidence brought to court showed that McDonald's coffee was served at abnormally high temperatures, and in 10 years, more than 700 customers had complained about coffee burns. In addition, the jury's award was subsequently reduced to $480,000.
The major difference between conditional fees here and the US contingency fees is that in this country it is judges who set damages in personal injury cases, not juries. Judges, who will not necessarily know that the case is being run on a conditional fee basis, will not increase the amount of compensation simply because the client will pay the lawyer a success fee out of the damages.
And, the Law Society points out, the fact that in England and Wales losing parties pay the winners' costs reduces the risk of so-called nuisance litigation. In the US, plaintiffs with flimsy cases may be paid off by defendants with strong cases, simply because they cannot recover their costs even if successful. Lawyers won't be tempted to encourage flimsy cases to go ahead, because with a maximum success fee of 100 per cent, it would be uneconomical for them to take on a case with less than a 50 per cent chance of success.
But many remain unconvinced. Speaking in the House of Lords debate, Lord Ackner raised fears of "occasions when this country will exceed the worst excesses of the United States". The Bar points to "strong evidence" from the US that conditional fee systems can lead to disputes between lawyers and clients who fail to agree when a win really is a win. It has, however, accepted that conditional fees are a fact of life and is sending guidelines on their implementation to barristers.
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
General election 2015: David Cameron's promise brings uncertainty to investors
Bargain Hunter: BT improves its mobile reception with 'incredibly competitive' deals
Have a happy new financial year
Simon Read: 'It went below the radar but you could be eligible for a tax break on your savings'
- 1 Britain First 'acting like Ukip henchmen' by invading meeting of activists in revenge for pub protest against Nigel Farage
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Tidal: Jay Z's Spotify rival streaming service criticised for making wealthy artists even richer
- 4 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
- 5 A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...
Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...
Day In a Page
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000