The Law Society has spoken out to warn the Government that proposed changes to the way 'no-win, no-fee' legal arrangements work may deny the poor access to justice.
The House of Lords is currently debating changing the law to put an end to what has been dubbed 'the compensation culture'. However, the Law Society warns that wholesale changes to the law would penalise victims of accidents, fraud and negligence.
The current law has been widely criticised for fostering a culture of legal compensation claims for the slightest problem or mishap. This has largely been the case since legal reform in the late 1990s which brought in no-win, no-fee legal services to replace legal aid in a wide variety of cases.
Under the no-win, no-fee rules claimants avoid paying legal fees in advance and if represented can be sure that they will keep all the compensation should they win. The losing side pays the legal costs of both parties, as well as a success fee of up to 100% of costs to the winning solicitors. Most parties take out insurance policies which ensure that they are covered in the event that they lose.
The system has been criticised for encouraging spurious litigation because parties do not have to pay anything themselves towards the process. Often cases are settled out of court because the other party fears the cost of losing so much.
The proposals under discussion form part two of the Legal Aid, Sentencing and Punishment of Offenders Bill. This would see claimants having to pay up to 25% of their legal fees out of their own damages.
Critics argue that this change would only benefit insurers who currently settle a large proportion of the cost of lost claims. It is thought the changes may reduce the number of claims by 700,000 per year, but it is argued that this would be the number of people denied access to justice.
Lawyers are understandably anxious about the changes.
"The changes to 'no-win, no-fee' arrangements represent a complete and unnecessary policy about turn, when a lean on the tiller would achieve the desired improvements. They favour the wrong-doer and their insurers rather than the injured person. We call upon the Government to think again otherwise the only result will be rejoicing in the boardrooms of insurance companies at the expense of the injured victim," said Desmond Hudson, chief executive of the Law Society.
Related links:
Read more on the story (Press Association)
What does no-win, no-fee mean? (FindLaw)
Find local specialist solicitors throughout the UK (FindLaw)
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