No win, no fee, no risk

You too can sue without incurring huge legal costs

Blame and claim has always been the American attitude to trouble and disaster - and the idea has spread to Britain, where high fees and the risk of being saddled with your opponent's costs if you lost made taking legal action an expensive gamble.

Blame and claim has always been the American attitude to trouble and disaster - and the idea has spread to Britain, where high fees and the risk of being saddled with your opponent's costs if you lost made taking legal action an expensive gamble.

Since 1995, lawyers have been able to use the no win, no fee system, where you face a bill only if you win. That covers the first worry. They can also provide you with "after-the-event insurance" which will pay out if you lose and have to pay the other side's costs.

Group legal actions - class actions - against big corporate targets always hit the headlines. Railtrack may yet face one in the wake of the Paddington disaster. But there are an ever-rising number of individual actions.

Earlier this month, a former head-teacher, Mrs Muriel Benson won £47,000 from the local authority which had ignored her complaints about her 60- hour week and rising stress levels for eight years. Eventually she cracked under the pressure and had to give up work.

How much your lawyers will take if you win your case under the new system depends on the terms you agree at the outset, though the Law Society has imposed a financial ceiling.

"Normally, solicitors start with their own fees, and add a success fee, " says Steve Phillips, partner at London solicitors Lawrence Graham. "That success fee cannot be more than the costs you receive from the other side. But the scheme gives you a second layer of protection. The levy cannot come to more than 25 per cent of the damages their client receives."

The no win, no fee system could not work unless there was protection against having to pay the other side's costs if you lose. But the Law Society, and Claims Direct, the biggest outside group involved in the business, can offer the insurance which covers the risk.

Admittedly, the costs of the Law Society's plan are to double next month. At that point premiums on its Accident Line Protect will rise to £148 for cases after traffic accidents, and £315 for those involving other forms of personal injury. Only in cases of medical negligence will insurance costs depend on individual case details.

At present you have to pay that premium whatever happens, directly or from the damages you get. But changes coming in next year will alter that, if you win your case. From then whoever you have sued is responsible for that insurance bill and paying the lawyer his share of the spoils.

Claims Direct, an independent group which uses TV advertising to bring in customers, is probably the biggest player. "We always get extra calls after some tragedy has appeared on the news," says John Rafferty, one of the group's senior managers. "We have had calls from the families of one or two British pensioners killed or injured when their tourist bus veered off a mountain road in South Africa and crashed into the valley. There was also a lot of extra interest after the nail bomb explosion in the gay pub in Soho earlier this year."

Claims Direct operates with independent solicitors. Once claimants have filled in a questionnaire, that goes any of the 180 firms of solicitors in the scheme. They assess whether legal action would have a more than 50/50 chance of success, and whether to take the case.

If the first group will not accept it, a second independent group will re-assess it. Claims Direct will arrange cover against the risk of losing your case and facing the other side's standard fee. The company limits charges to 30 per cent, not 25 per cent of the potential damages you receive.

Solicitors do most of the work, directly or indirectly, with the Law Society and Claims Direct. But there are others involved. Anyone can set up in the business, and there are no controls on charges or training. In one case, a man found an unqualified firm's fees took £1,800 of the £2,000 he was awarded. A government committee is considering rule changes.

Sticking to solicitors or schemes which use them, makes far more sense, because they are legally trained, and there are limits on what they can charge. Only solicitors can appear in court, or brief barristers to do so. But most cases are settled without a formal hearing - the threat of legal action provides a powerful incentive for companies to settle.

Delays are endemic. The average personal injury case takes four and a half years showed an official report. Claims Direct maintains its typical case is settled in a year.

The government likes the no win, no fee system. It provides them a useful alibi for plans to abolish legal aid on personal injury from next April. The crucial point is to stick to systems based on solicitors - and to be sure of the potential insurance costs, and the scale of your solicitor's potential rewards before you start.

Law Society Injury Helpline, 0500 192939;

Claims Direct, 0800 630 630