Heads I win; tails you lose
Suing for damages? Reduce the risks with a conditional fee agreement - if you can get one.
Wednesday 30 July 1997
On the first morning of the course, he slipped on a wooden floor and shattered his left ankle. It was severely fractured and needed two operations. "The accident had an impact on my entire lifestyle," he says.
Mr Brown consulted the Reading office of Shoosmiths & Harrison, a leading firm of solicitors specialising in accident work, with a view to suing the company that had organised the course. Paul Paxton, head of personal injuries at the Reading office, advised him that he had a good case for damages and loss of earnings, but warned against taking it to court because of the high financial risk involved; if he lost, he would have to pay not one, but two lots of legal expenses.
With accident claims over pounds 1,000, the rule is that the loser pays the winner's legal costs plus his own. And that can easily add up to several thousand pounds on even an average case. Of course, if you qualify for legal aid, the Legal Aid Board will pay this - or most of it. But sadly for Mike Brown - and other middle-income earners - he was too "rich" for legal aid. It is available only for people on very low incomes or income support: less than half the population qualifies. So it looked as though he was not going to be able to sue.
But on 5 July 1995 the Conditional Fees Agreements Order and Regulations came into effect. For the first time, lawyers in England and Wales were allowed to take on cases on a "conditional fee" basis, ie they get paid only if their client wins, and not if he loses. The client merely has to sign a conditional fee agreement - also known as a "no-fee" agreement - with a solicitor who is prepared to accept work on that basis.
So, on the stroke of midnight on 4 July, Mike Brown made legal history by being the first client to sign such an agreement. His lawyer, Paul Paxton, explains: "We were monitoring the new law's progress through Parliament and we offered Mr Brown a `no-win, no-fee' agreement, which he at once accepted. The case is due to come to trial in the High Court early next year."
Conditional fees removed the hazard of having to pay your own solicitor if you lost; however, the risk of paying the other party's fees remained. But, in August 1995, "after the event" legal insurance came on to the market, giving unsuccessful litigants cover against the other side's legal costs and even against their own solicitor's out-of-pocket expenses. At last, there was double protection.
Since July 1995 more than 12,000 people have signed "no-win, no-fee" agreements. David Hartley, head of solicitors' remuneration at the Law Society, says: "Conditional fees seem to be working better than the Law Society dared to hope. Many of these new claims would never have got off the ground before. Many people were frightened of taking legal action."
The scheme is limited to accidents, insolvency and human rights cases, but even if financial circumstances change half-way through, you can still switch - as the following case shows.
A lorry driver in the East Midlands banged his head badly when unloading cages containing goods in his trailer, which had broken loose through faulty strapping. He suffered headaches and blurred vision for several months, and got legal aid to sue his employers for negligence - but then his legal aid was withdrawn because his earnings increased. So his solicitor continued on a conditional-fee basis, and he won more than pounds 2,000 damages with the other side paying his legal costs.
You no longer need to be very rich - or very poor - to seek justice. It is no longer you who take the risk when suing, but your lawyer. Says Paul Paxton: "The client loves the fact that we are putting our money where our mouth is."
Insurance companies have been quick to feel the impact of the new system. Some companies are reluctant to pay out, and use every possible delay hoping that the aggrieved party will lose heart. But now, with solicitors presenting claims which insurance companies know they can take right into court, insurers are settling more cases than ever before.
Cynics may think this is all too good to be true; what's in it for the lawyers? One answer is that, if they win, they are entitled to charge twice: their basic fee for the case, worked out on an hourly charging rate, plus a "success fee".
This can be as much as double the basic fee - but the Law Society has drawn up a model conditional-fee agreement which recommends that the success fee should be not more than 25 per cent of a client's total winnings, ie the damages recovered or the amount accepted in settlement of the claim. The Law Society of Scotland makes the same recommendation for solicitors north of the Border.
Kerry Underwood is a long-standing champion of conditional fees, and his St Albans firm, Underwoods, has undertaken many cases on this basis. He points out: "The 1995 regulations make it mandatory to have a written conditional-fee agreement and to state in it whether or not there is a cap - but they impose no requirement actually to have one." Yet David Hartley, of the Law Society, insists: "Only in marginal cases, where there is a high degree of risk, will 100 per cent of the basic fee be justified."
Says Paul Balen, of Freeth Cartwright Hunt Dickens, a leading Nottingham firm: "Risk assessment is an important part of my role. I'm not going to take on a case unless I think there's a reasonable chance of winning it. That's why it's nonsense to talk about `ambulance-chasing' or taking on worthless, trivial cases. Don't forget, we are taking the risk of being considerably out of pocket if we lose."
Some firms are more adventurous than others. London-based Leigh, Day & Co is acting for 40 lung cancer victims who are suing two leading tobacco companies after the Legal Aid Board had refused them legal aid because of lack of confidence in their chances. The case is likely to take several years and the lawyers involved - both barristers and solicitors - stand to lose fees totalling pounds 3m if it fails; but, says Martyn Day, a senior partner, "Our whole rationale is that we operate at the cutting edge of the law. We enjoy taking on cases others shy away from."
An important question of principle is involved in all this: namely, the public's right of access to our courts.
In May 1997 Sir Richard Scott, Vice-Chancellor of the Supreme Court, told a conference in London: "Legal rights to which individuals are entitled must, if they are to have and retain respect for the rule of law, be perceived by them and by others as being enforceable in the courts of law." He said that conditional fees had proved so successful that they should be more widely available, and he called on the Lord Chancellor to extend their scope to cover nearly all civil disputes.
Lord Irvine of Lairg should respond positively to this call. It would be a big step forward for justice for the ordinary citizen in Britain todayn
How to find the right solicitor
You need an experienced, sympathetic solicitor specialising in accident cases. Your local High Street solicitors' firm may well be able to handle your will or buying or selling your house, but they may have no one with the necessary experience in fighting accident cases or dealing with insurance companies.
You may find the right person through personal recommendation or an advertisement in the local newspaper or in the Yellow Pages. But if you don't, there are two useful Freefone helpline services.
The Law Society's Accident Line Project scheme can be reached on 0500 192 939. An operator will put you in touch, free of charge, with an experienced solicitor on the Law Society's panel of 2,000 accident experts. At a free consultation, he will say whether you have a good case, how much you might claim and how best to go about pursuing it.
If he thinks you have a good case, he will not necessarily suggest you enter into a confidential fee agreement with his firm. Depending on your circumstances, he may suggest you try to get legal aid, or else say that he will take the case in the traditional fee-paying way. Whatever the advice, you do not have to accept it or take the matter any further if you do not want to.
The Law Society for Scotland does not have a free helpline for prospective users of its Compensure scheme. They should either call the Law Society in Edinburgh on 0131-226 7411 and ask for the Records Office, which has a list of available solicitors, or call Dial-A-Law on 0990 455 554, which provides recorded information at the cost of a national-rate call.
But the second free helpline is available throughout the United Kingdom; the National Accident Helpline, on 0800 842 846. This is a private organisation, and it will also put you in touch with a solicitor specialising in accident cases. Launched in 1993, it frequently advertises in the press and is in the Yellow Pages.
As with the Law Society's Accident Line Project, the helpline offers a free consultation, but there is no obligation to sign a confidential fee agreement, or to take the matter any furthern
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