Clarke to reform 'no win no fee' cases

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The justice secretary has announced major changes to the civil justice system and reform of 'no win no fee' deals.

Ken Clarke told the House of Commons we now have a situation where many defendants settle out of court, even when they have a strong case, in order to avoid huge legal costs.

He plans to abolish recoverability of success fees and associated costs in 'no win no fee' conditional fee agreements.

Under the current regime, defendants must pay these additional costs if they lose.

Instead, claimants will have to pay their lawyer's success fee and will therefore take an interest in controlling the costs being incurred on their behalf.

Clarke said the government wants to encourage the use of damages-based agreements in litigation before the courts.

These are another form of 'no win no fee' agreement, under which lawyers can take a proportion of the claimants' damages in fees.

Clarke said he will seek legislation to restore the fundamental values of civil justice and attacked a system where legal costs often outstrip compensation payments.

He called the current situation "unparalled in any other country".

"We plan to end the recoverability of success fees and insurance premiums, which drive legal costs, award claimants a 10 per cent uplift in general damages where they have suffered loss, and then ensure that they take an interest in controlling the bills being run up on their behalf by expecting them to pay their own lawyer's success fee," he said.

Shadow justice secretary Sadiq Khan said it is difficult to disagree with reforming civil justice, a process that the last Labour government began.

He said that while he accepts the costs of civil cases should be reformed, all people should have recourse to the civil courts.

He said that the poor already have trouble finding a lawyer to act on their behalf and these changes may exacerbate that situation.

"There is a fear that these plans go so far in trying to keep down costs that some claimants with meritorious cases would find it difficult, if not impossible, to find a lawyer to take on their case," he said.

Clarke said any effect on insurance premiums is a matter for that industry, but said costs could well have been driven up by 'no win no fee' cases.

Former justice secretary Jack Straw welcomed the changes, and called for claims companies that advertise for clients and then sell on bundles of cases to solicitors to be shut down.

Clarke said his reforms should result in fewer "purely speculative cases" and an unacceptable compensation culture has developed.

Elfyn Llwyd (Plaid, Dwyfor Meirionnydd) expressed concern that access to justice for the poorest will be affected, and the only beneficiaries will be insurance companies.

There will be a consultation on other plans to improve how court judgments are enforced, so that people receive what it is judged they are owed, as well as introducing automatic referral to mediation in small claims cases, or mediation awareness sessions in higher-value cases, to help people avoid court where possible.

Clarke wants to raise the small claims limit and to change the county court jurisdiction so that the High Court is used for bigger and more complex claims only.

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