What the Justice Bill will really mean: 1. ‘No win, no fee’… no more.

The so-called ‘Justice Bill’ currently going through Parliament will cause massive problems for claimants in two major areas. By stopping conditional fee agreements (‘no win, no fee’) and recoverability of ATE (after the event) legal expense insurance in personal injury cases. And by removing legal aid in clinical neligence cases. 

These problems seem not to be appreciated or even understood by the government. It is complicated, and all the arguments seem to get lumped together whenever we read about them. I hope these posts will clarify things a little! My colleague Marcus Weatherby leads these explanations with a look at how the Bill will affect ‘no win, no fee’ cases.

1. It would ‘reform’ (abolish) the CFA system.

The CFA (conditional fee agreement system, commonly known as ‘no win, no fee’) has, until now, enabled personal injury claimants to afford justice. I say ‘afford justice’, because many of these cases are extremely expensive to pursue, however convincing a case might sound.

Under the present system, lawyers take on what they consider to be viable (ie winnable) cases on a ‘no win, no fee’ basis. They also take out an ATE (after the event) insurance policy to protect their client against the defendant’s legal fees in case should they lose. The system really has its own built-in safeguards against unnecessary expense. Because the lawyers don’t get paid if they lose – and have no wish to harm their good reputations – they avoid taking on ‘hopeless’ or frivolous cases.

In return for taking the risk of being unpaid, the lawyer is entitled to claim what is known as a ‘success fee’. It’s there to ensure that people with higher risk cases continue to get representation. The greater the risk of being unpaid, the greater the potential reward of the success fee. And the system ensures that these fees aren’t too high by empowering a judge to rule whether or not they’re reasonable. If they’re not deemed reasonable, they can be reduced or even removed.

The principle underpinning it is that justice is served by penalising the person or organisation that caused the injury, and not the victim. After all, the injured party would not have had to take out an ATE premium had he or she not been injured in the first place!

But what the Bill seeks to do is to abolish ‘recoverability’ of the CFA success fee from the losing side. The Government has decided that this will have to come out of the claimant’s damages award. And it will also abolish the recoverability of ATE insurance premiums from the losers, which will also have to be paid by the claimant’s side.

So – quite bizarrely – having proved that he or she was wrongly injured by the defendant, the victim will actually have to pay for the privilege! But it gets worse…

The Bill is also looking to cap lawyers’ success fees at 25% of any damages awarded. Clearly this will dramatically reduce their incentive for backing their own skill and taking on these often costly cases in the first place. When combined with the abolition of legal aid, this aspect of the Bill serves only to further restrict access to justice for members of the public.

As a sop to the Bill’s opponents, the Government proposes to increase damages for pain and suffering by 10%. Do Messrs Clarke, Djanogly & Co. really believe that this is enough to ‘compensate’ claimants for the swingeing curtailments of their rights to redress that they’re about to impose?

This Bill will effectively price the quest for justice out of the market for many ordinary people who become injured through no fault of their own. Again, this is NOT justice, and it’s not even going to save the taxpayer much money. The only ones who’ll be cheering these proposals are the insurance companies.