No Win – High Fee

The Master of the Rolls recently chastised Irwin Mitchell lawyers for requesting inordinate legal fees; in a personal injury case worth nearly £13,000 in damages, the complainant incurred nearly £75,000 in legal fees.  

“"Unless this is an exceptional case, the fact that, without even incurring the cost of a trial, it cost the claimant nearly six times as much to pursue the claim as it was actually worth suggests that something is out of kilter in at least some parts of the civil justice system” said Lord Neuberger.

David Cameron is aware of the problem.  The Prime Minister has recently announced plans to amend the civil litigation scheme to cap fees for personal injury lawyers.  The key reforms included in the Legal Aid, Sentencing and Punishment of Offenders Bill are:

* Capping personal injury fees incurred in the fast track scheme at £25,000 for motoring accidents, employers’ liability and public liability cases.  Currently, the cap is £10,000 and only applies to claims resulting from motoring incidents.

* Abolishing the ‘success fee’ that solicitors usually charge in a ‘no win, no fee’.  Instead lawyers can claim a success from the damages awarded to the client, although no more than 25% of damages can be recovered.  

Undeniably, there is a problem with the current state of affairs.  The insurance industry has highlighted that motor accident claims alone cost £2.4 million per day. 

Yet, these costs may not be entirely attributable to solicitor’s fees.  A Law Society spokesperson explained to Law and More how fees in these cases can accumulate:

“Basic hourly rates for solicitors in such cases are approved by the Master of the Rolls, while the success fee under a no win no fee agreement depends on the circumstances of the case; 60% may not be unreasonable. But there are many contributors to costs, not just the work done, or hourly rates charged, by solicitors.  There are the sometimes eye-watering fees charged by expert witnesses; court fees, which have increased over the last few years by many times the rate of inflation; and the premiums for ‘after the event insurance’ which sometimes exceed the actual costs risk for the insurer.

“Behaviours of claimant and defendant can also have significant effects on costs. If a defendant acknowledges fault and makes a reasonable and early offer to settle, costs are substantially reduced.

“There is clearly a case for streamlining procedures and for penalising either party in a case where unreasonable behaviour increases costs but we must not prevent genuine claimants seeking advice from a solicitor in order to seek redress. The changes currently before Parliament in the Legal Aid, Punishment and Sentencing of Offenders Bill threaten to deter all but the wealthiest claimants from seeking justice in this way.”

Other stakeholders are concerned that the proposals will create more problems than they will solve.  A spokesperson from the Association of Personal Injury Lawyers told Law and More:

“Cutting legal aid for people suffering from medical injuries at the same time as restricting ‘no win, no fee’ will leave many seriously injured people unable to obtain the compensation they need to get their lives back on track.

“The Government’s intention is to cut costs for itself and for insurers by forcing injured people to give up part of their compensation to pay legal fees. If the Bill succeeds as it is, the cost of running a legal case will be transferred from the wrongdoer onto the injured party, if they can find legal representation at all.”

Laura Mckoy