'No win, no fee' claimants will be liable to pay their own lawyers' success fees under plans outlined by the justice secretary
Proposals to tackle Britain's "damaging compensation culture", control legal costs and divert cases from courtrooms into online resolution have been unveiled by the justice secretary.
Announcing significant changes to lawyers' fees and court administration, Kenneth Clarke described them as the "first major overhaul of the civil justice system" since the mid-1990s.
One key alteration will be to make claimants who use "no win, no fee" agreements to hire solicitors liable to pay their own lawyers' success fees. At present a losing defendant has to pay those costs; the shift is intended to make claimants take an interest in reducing costs.
The aim, Clarke maintained, was to rebalance a legal system which allows claimants to sue for compensation with very little financial risk. Threats of excessive claims, for example, are preventing schools from organising trips because they fear exposing themselves to punitive lawsuits from if anything goes wrong.
He said: "Most people dread going to court because of all the cost and anxiety it involves. We must change that by helping them to avoid court where possible and cutting costs where that is unavoidable.
"With no major reforms, for 15 years the civil justice system has got out of kilter. People who have been sued can find that spiralling legal costs, slow court processes, unnecessary litigation and the 'no win, no fee' structures, which mean greater payments to lawyers than to claimants, are setting them back millions of pounds a year."
In personal injury claims, legal costs are becoming larger than the damages paid out in compensation, according to the Ministry of Justice. Of the cash paid out by the NHS Litigation Authority, which deals with medical negligence cases, 60% goes to lawyers and only 40% in compensation to victims. Reform would save an estimated �50m for the NHS in legal fees.
Asked whether the changes would have a deterrent effect on those seeking access to justice, the justice minister Jonathan Djanogly said: "We are not talking about ending 'no win, no fee' agreements. We are reversing the changes made by the last government in 1999.
"In practice [these changes would] mean that lawyers will have to consider carefully whether they think a case will go through and the claimants will hunt around to see which lawyers are charging the lowest fees."
Among other proposals is expanding an online system for dealing with road traffic accident claims to include personal injury and clinical negligence cases.
Claims of up to �50,000 in such cases will now be dealt with online. It is hoped that increasing numbers will be resolved by mediation ? if not, they will go back into the court system. Ultimately up to 680,000 cases a year could be dealt with online ? up to 90% of such claims.
The maximum value for small claims will be raised from �5,000 to �15,000, reducing the number of cases going into court and one national jurisdiction for county courts will be introduced allowing judges to be moved around the country more efficiently.
Responding to the plans, Andrew Dismore, co-ordinator for the Access to Justice Action Group (AJAG), said: "The announcement is very bad news for claimants. One in four will no longer receive the compensation to which they are entitled. Three out of four will lose up to 25% of their compensation in legal bills which should be paid by those responsible for the claimant's injuries ? the defendant's insurance company.
"[Such companies] are today's big winners, by many millions of pounds, money taken from the pockets of those injured at work or on the roads or in hospital through someone else's fault, and badly needed by them."
The Law Society disputed the idea that doctors and businessmen need to be 'protected' from frivolous legal cases because UK society has become too litigious. The society's president, Linda Lee, said the proposals were abhorrent for those who have suffered genuine injury.
"The Ministry of Justice is about to implement a devastating attack on access to justice in the mistaken belief that ordinary people will be able to stick up for themselves against local and central government, the medical profession, landlords, big business and other authorities.
"Taken together with the government's legal aid reforms, these plans on civil costs funding mean that ordinary people won't be able to obtain proper redress for the wrongs they have suffered."
Source: http://www.guardian.co.uk/politics/2011/mar/29/clarke-compensation-culture
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