Govt to consult on contingency fees and limiting 'loser pays' model

civil litigation costs

The personal injury litigation system in this country is something we should all be very proud of because unlike other jurisdictions it has in theory genuine access to justice for all and not just the rich and famous.

The main reasons for this are referral agents advertising for cases, and the recoverability of ATE insurance and a success fee which allows law firms to take cases on difficult and complex cases. Referral agencies have increased the level of awareness through television advertising and other forms of media as they are specialists in this area and lawyers are generally poor when it comes to this field. As a consequence many more people now understand that however poor or disadvantaged they may feel they are, that they have a chance for justice by utilizing the simple to understand “no win no fee” process. No-one wants fraudulent or undeserving claims to be successful but in the main I think most on all sides would agree that they are not. The press seize upon perceived abuses of the “compo culture” in order to sell papers but the reality is that cases only win for the claimant and the law firm if negligence has been committed. The defendants case handlers and lawyers have to have the ability to know when to settle a case and when to defend it but this is an issue of training and the skill set of the insurance companies and I think here lies the problem.

The high costs of personal injury litigation are actually due to the lack of quality in the defendant’s case handling departments. Often juniors with no legal training are trying to decide on complex matters of law and either sit on the files or play safe and defend cases that they should be settling. This is where the costs mount up and the real problem lies. While generally levels of access to justice are good, it is still very difficult for children, the elderly, the deaf, blind or iliterate, or those whom are generally disadvantaged and unsophisticated in legal ways to get to the point of bringing successful claims after an incidence of negligence has occurred. These vulnerable individuals find it particularly hard to bring cases particularly in the areas of clinical negligence and disease where cases can be very risky for law firms to take on and few lawyers have the expertise required. Bringing in fixed fees right across the fast track and removing the recoverability of success fees and ATE insurance would seriously reduce access to justice in these critical areas where the NHS and employees are sometimes due to negligence seriously injuring people. Even with the current good system in place many of us know people whom have suffered from a operation carried out incorrectly or a wrong diagnosis or course of treatment which has seriously blighted their lives and yet they don’t bring a claim and justice is not done for them because they feel it will be more trouble and grief than they can cope with. As a society surely we want these people to obtain the compensation they deserve. As a society we should do everything we can to encourage claims in these and all circumstances where negligence has occurred. If we remove ATE cover law firms will be less likely to take cases on, and if the success fee is taken from the claimant, the claimant will be less likely to bring the claim and will not receive a fair level of damages. A 10% increase in damages will not offset a 25% success fee and if the law firms aren't awarded the success fee they will take on less cases. In certain borderline or highly complex cases success fees of 25% will not be enough for law firms to take the case on, particularly with the ate insurance tocover the costs of investigating the claim. As a society if claims are not brought it is inevitable that our society will become a more dangerous place to be as successful claims highlight areas where negligence has occurred and therefore action is taken by the defendant to ensure it does its best to prevent the negligence taking place again. Without the claim, negligence will continue and more and more people will be injured. The sensible approach is to ask the courts to continue to try and fix success fees in all the various areas so that the correct balance is reached depending on the risks involved in bringing claims in that particular area. Defamation is no doubt different to clinical negligence or RTA and therefore different levels of success fees should be agreed as a one size fits all approach is clumsy and inappropriate. The system needs improving and taking forward as it matures and not dismantling and taking backwards. Limits on ATE premiums could be imposed again depending on the area of law. It should also be borne in mind though that the success fee is not just about rewarding a law firm for winning a case that it might lose. It is also designed to compensate the law firm for all the time it spends speaking to potential claimants and vetting cases and obtaining medical and engineers reports in order to to try and seen which cases have merit and which don’t.

Reducing success fees will lead to law firms only taking on the easiest and most obvious cases or going into new areas where results will be uncertain. The the real problem with escalating litigation costs in most areas stems from the insurance companies not training staff to determine which cases to settle and which cases to defend. This is the area that needs to be improved to reduce costs. Fundamentally changing a legal system that currently works well could severely reduce access to justice whilst not actually reducing costs at all. It could lead to increased costs if satellite litigation around these issues means that many more cases go to the courts. I think it is relevant that Lord Justice Jackson has no actual experience of personal injury, disease, or clinical negligence matters, and nor I don't think do any of the new ministers. Certainly Mr Djanogly whom has been making the recent announcements regarding the Government's support for the changes was himself a corporate lawyer in the City and has no experience of any litigation, never mind in the areas most affected by these proposals. I suspect that the real agenda for the Government not surprisingly is to try and win votes by removing the tabloid "compo culture" headlines even when they know from their own reports that the so called "compensation culture" is a myth and that the number of claims in most areas are going down rather than up. They will also be under considerable pressure to save money for the local Council's and NHS by reducing the number of claims that get taken on and reducing the legal bills of ones that do. But what is the actual effect of this.

Inevitably lawyers and those in related areas lose their jobs, access to justice is reduced, and we all live in a more dangerous place with higher risks of bricks falling off scaffolding, our child suffering injury from a botched operation, or our father's friend dying because his employer did not have to deal with the lethal asbestos in the ceiling at work. Is this the way to deal with rising litigation costs or is the best solution to ask why are employers doctors and local councils negligently injuring people and what can be done to stop this.

anon -30 Jul 2010 | 10:39

Very interesting

Very interesting read, especially the bit about the compensation culture. Nice to hear the other side of the story.

anon -02 Aug 2010 | 17:16