No win - no fee reforms announced. Succesful claimants to pay own legal fees!

bowdonblue

Not sure if this is in the right board, so mods please move if needs be.

The government announced this week that they are planning to make sweeping reforms to the way in which civil damages claims are funded. This will affect hundreds of thousands of people each year.

I work in the personal injury sector, and will try to objectively summarise the proposed changes.

The headlines for "phase 1" of the reforms are as follows -

• we will still have "no win no fee" system, BUT the successful claimant will have to pay the "success fee" part of his/her own legal fees from their own damages, rather than being able to recover these costs from the Defendant (currently it's usually the Defendant's insurer who pays)
• damages for personal injury (known as "general damages") will be increased by 10% to allow for the above
• as an alternative lawyers will be allowed to act in return for a share of their clients damages (contingency fees), which is not allowed currently [this won't fly]
• claimants who lose won't have to pay the Defendants legal fees (called "qualified one way costs shifting")

The government are also now consulting on proposed further "phase 2" reforms, as follows -

• RTA claims with a value of up to £50k to be dealt with via an online "portal" with simplified evidence rules (this currently operates for RTA claims up to the value of £10k)
• all "employers liability" and "public liability" injury claims to be dealt with via this online portal (it's currently RTA only)
• raising the "small claims" limit from £5k to £15k (in the small claims court you have to bear the vast majority of your own fees and cannot recover them from the Defendant, even if you win)
• expand parties obligations to try "mediation" in small claims cases.

In my opinion the effects of "phase 1" of these reforms will be -

1. if you have a valid claim which is not an "obvious winner", then you may struggle to find a lawyer willing to act for you on a "no win no fee" basis, and you will have to pay your own legal fees up front (usually about £5k+), otherwise just give up
2. if you have an "obvious winner" and you do recover damages, whilst the injury element of your damages will be slightly (10%) higher, this will be off-set (perhaps more than off-set?) by the fact that some of your legal fees will have to be deducted from those damages before you get your money
3. if you can find a lawyer willing to act for you on a defended claim, you may as well sue on the basis that if you lose you won't have to pay the other sides legal costs.

If "phase 2" comes in, then any personal injury claim (RTA, EL or PL) under the value of £50k, which would include some very serious injuries, would be dealt with via an online portal with restricted rules on evidence. :eek:

Worst of all, if the small claims limit for NON personal injury claims goes up to £15k, then practically anyone who has a dispute with their plumber, builder, car garage etc will have to either act as a "litigant in person" (nightmare, imo), or pay their own legal fees even if they win, which in many cases will take up a large part (if not all) of their damages.

So who stands to gain and lose from this?

By far and away the the biggest winners will be insurance companies (good luck waiting for a drop in premiums!), and way behind but in second place is ... the government, who apparently stand to save around £50m per year via the NHS (who pay out for medical negligence claims).

The losers will include the best part of a million people per year who currently seek damages. A large number of them will simply not be able to proceed with a damages claim, and those that do will end up with reduced damages after legal fees are deducted from their claim.

For what it's worth, according to the stats there is no compensation culture. The governments own research confirmed this in 2006 (* see below), and in recent years the official stats show that the number of claims have actually reduced year by year.

The government still have to pass "phase 1" through parliament, and "phase 2" is up for public consultation.

* The House Of Commons Constitutional Affairs Committee 2006 Report “Compensation Culture” concluded that (para 111):
“It is evident from the statistical evidence that the UK is not moving
towards a “compensation culture” driven by a significant increase in litigation.”

Kilty_2

Sounds like it'll make the "sure fire" cases (ie, fraudulent) even worse and more common than they are now.

Nice one. :T

mikey72

Yet another case of "be careful what you wish for".

So, when will we get the next reason for insurance premiums rising, if all the compensation culture excuses can't be used and repeated so happily.

Flyboy152

Yet again this government pandering to the wealthy. Denying justice to the masses has always been a particularly ugly trait of the Tories.

bowdonblue

Kilty wrote: »

Sounds like it'll make the "sure fire" cases (ie, fraudulent) even worse and more common than they are now.

Nice one. :T

It won't make much (if any) difference to the number of fraudulent claims, unforunately.

The fraudsters know how to make the claim look like an "obvious winner". It's only when (or if) a lawyer/insurer digs deep and scrutinises the claim in detail that they are exposed.

The big losers will be the legit people who need to make a claim.