The Modernising Justice White Paper, which Lord Irvine published yesterday, will dismantle the legal aid system, which now costs pounds 1.6bn a year.
Lord Irvine promised an end to a system which only provided justice to the wealthy and the poor.
He said: "Think of the ordinary people of `middle England' who have no real access to justice because they do not qualify for legal aid but dare not risk the costs of going to law to protect their rights. I know that fear of lawyers' bills rules out ordinary people protecting their rights. But it is not acceptable that civil justice is for only the very rich or the very poor."
The White Paper contained few surprises not mentioned in the Queen's Speech last week. But major changes were announced to encourage the use of "no win, no fee" cases, which will be extended to cover disputes over the division of matrimonial property.
The Law Society, however, said the conditional fee arrangements were inappropriate for such cases because they demanded a winner and a loser.
The society also claimed plans to make conditional fees more attractive by allowing successful litigants to claim back their insurance premium and lawyers' "success fee" from the loser, would not help those bringing personal injury claims.
A society spokesman said: "Victims of car accidents who have suffered severe injuries in circumstances which are not clear-cut will find it very difficult to find a solicitorbecause solicitors will be gambling their money and time."
But Lord Irvine said the changes, which will begin to come into effect in April, would help to reduce a "vast un-met legal need in Britain".
A new community legal service will be set up to give quality advice to those involved in disputes. People will be given a "funding assessment" suggesting alternatives to expensive court action, such as mediation. They will be advised on whether to approach solicitors for a conditional fee arrangement or to drop their case because it is too weak. The most needy cases will be allocated publicly funded lawyers on fixed-price contracts.
The changes will help to simplify a legal advice system which has grown to 6,000 staff and 30,000 volunteers working for 2,000 agencies, which receive pounds 150m in grants a year. The cost of civil and family aid has risen by 35 per cent in five years to pounds 793m last year.
The criminal legal aid system, which cost the taxpayer pounds 733m last year, will be replaced by the Criminal Defence Service. Defendants will be represented by quality-tested lawyers who are given fixed- price contracts by the CDS.
The new service will employ some salaried lawyers, but the Lord Chancellor said they would be there to provide a quality benchmark and were "a million miles" from a US-style public defender system.
Heather Hallett, QC, chairman of the Bar Counsel, claimed the new arrangements would lead to too much state control. She said: "Lawyers may not be so fearless if they have the state on their shoulder and a financial disincentive against properly preparing their case."
The White Paper also provides for a speeding up of the legal process. There will be only one appeal in civil cases, while criminal defendants will usually appear before magistrates within two days.
Magistrates courts will be allowed to employ private security firms to collect fines.
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