No-win no fee agreements and access to justice

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Such agreements mean that, if a case is lost, the Claimant receives no compensation and the lawyers involved do not earn a fee.  Effectively they will work for nothing.  Conversely, if the case is won, the Claimant is compensated and the lawyer is paid, usually with a "success fee", i.e. a percentage uplift on fees to reflect the risk of losing.  This fee is set at the outset of the claim and reflects the risk of winning versus losing.

The basic rule in English law is that the loser pays the winner's costs and an insurance policy is taken out to protect against the risk of having to pay the losing party's costs.  

The point of a Conditional Fee Agreement is access to justice.  Access to justice for those who cannot afford to pay privately for legal fees.  

Once initial instructions are taken a decision will be made by lawyers as to whether or not a case meets the criteria for a Conditional Fee Agreement.  Clearly a firm cannot afford to accept a case when the prospects of success are so low that the risks do not make economic sense.  That said, lawyers don't only take those that are clear winners, hence the risk and the success fee.

Conditional Fee Agreements are currently under review and Claimant lawyers are concerned about the impact on innocent victims.  Many Claimants may have suffered a minor injury, but one which may have forced them to take time off work, pay for care, etc.  Although the final sum awarded to them may appear to some to be insignificant, to the Claimant it may make a huge difference in terms of being able to pay their mortgage and bills when they have lost salary through no fault of their own.  This is aside from the physical or mental pain that they may have suffered.  

Recommendations to the changes in Conditional Fee Agreements include deducting a lawyer's success fee from the Claimant's compensation.  Another recommendation is to deduct the insurance premium from the Claimant's compensation.  It doesn't take a genius to work out that in low value claims the Claimant may be left with little or no compensation if these recommendations are brought in.  It is my view that this will prevent many from bringing claims.  In particular those who cannot afford to pay legal fees, but to whom the compensation that they may have received would make such a difference.

The proposed changes in Conditional Fee Agreements is perhaps slightly old news.  The reason that I am re-visiting it is that I have recently become aware of a recent case - Samuel Smith Old Brewery v Philip Lee (t/a Cropton Brewery) - albeit not a personal injury case, but one where a Conditional Fee Agreement stood in the way of the settlement of a claim.  The case could have settled prior to trial, with mediation, but the Conditional Fee Agreement was used as a costs weapon, rather than for the purpose it was intended.  Given that this was a dispute between two commercial firms, this can only add to the argument against Conditional Fee Agreements which Claimant lawyers are trying so hard to defend.

If the recommended changes are made, it is another blow for the man on the street.  As if times aren't hard enough. 

Deborah Blackmore
Litigation Executive - Personal Injury Team. 

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