Lawyers and solicitors operating on a 'no win no fee' basis may have their income cut significantly if proposed changes are introduced.
According to Lord Justice Jackson, an appeals court judge charged with conducting a review into the increase costs of legal action, losing a case can now result in bankruptcy for the unsuccessful business or individual. The judge suggested that this is partly because the losing party must pay the lawyers fees incurred under the winning party's no win no fee arrangement.
If the successful litigant has contracted with a lawyer or solicitor under such an arrangement (more correctly known as a Conditional Fee Agreement), their legal fees must be met by the unsuccessful party. The latter may also have to contribute towards often expensive insurance premiums incurred by the former to protect themselves against the possibility that they will have to pay out.
Lord Justice Jackson has said that this diverts money away from victims and instead lines the pockets of "ambulance chasing" legal professionals.
He wants to see legal fees of this sort capped at 25 per cent of the full value of a settlement. According to the judge, "a full adverse costs order is likely to be a disaster for most ordinary citizens."
No win no fee arrangements have seen more significant scrutiny and regulation in recent years. While they were developed to help ensure wider access to the justice system, many believe that lawyers and solicitors are taking advantage of the system to increase their own pay in a way that is not commensurate with the amount of work completed.
