U-turn on lawyers' 'no-win, no-fee': Successful actions can earn 100 per cent bonus

LAWYERS last night forecast widespread use of American-style 'no-win, no-fee' arrangements after they were given the go-ahead to charge twice as much as usual if they are successful in such cases.

Under this system, lawyers receive no money if they lose and a 100 per cent bonus for winning, giving people the chance to take action in the knowledge that they will not have to pay their legal advisers if the court finds against them.

The decision to allow a 100 per cent uplift on normal fees represents a notable U-turn by the Lord Chancellor's Department, which previously had proposed a 20 per cent maximum bonus. It follows complaints by the Law Society that it would not be worthwhile for solicitors to gamble with a no-win, no-fee scheme unless they could charge double.

The scheme will be restricted to cases involving personal injury, insolvency and the European Court of Human Rights.

Critics say that the system will encourage the sort of speculative actions that dominate the American legal scene, bringing with them huge medical insurance costs and widespread hostility towards lawyers.

However, with legal-aid cuts preventing many people from going to court, the so-called conditional fee system is seen by some solicitors as the best way of preserving at least limited access to justice. They point out that the losing parties in England and Wales will still be liable to pay the other side's costs, making it unlikely that people will take action unless they think they have a good chance of success.

In a statement last night, the Lord Chancellor's Department said it hoped that the scheme would be in force by the end of the year.

Rodger Pannone, president of the Law Society, said: 'There is now a real chance that conditional fees will make justice available to some people who would otherwise be denied it.'

Mr Pannone called on the Lord Chancellor, Lord Mackay of Clashfern, to extend the system to all cases, including commercial matters and libel hearings.

But he added that conditional fees could only make a 'minor contribution in access to justice compared with the damage done by legal-aid cuts. The Lord Chancellor's first priority should be to improve eligibility for legal aid.'