The proposed changes to the 'no win, no fee' system are hugely naïve

By Nicholas Jervis, Founder, Samson Consulting

In my opinion, the UK government’s plans to restrict ‘no win, no fee’ legal services are hugely naïve. This system was brought in by the government to enable people injured through no fault of their own to obtain justice and to relieve the government’s burden of providing legal aid for injury claims.

Victims will now be losing out on the compensation they need to rebuild their lives. The money that is needed to make changes to their homes or to cover their nursing care well into the future will unjustly be taken away from them.

The only people to benefit from these changes will be insurance companies. Do we really need to help them to make more profits?

The main impact the proposed restriction on ‘no win, no fee’ claims will have on solicitors is the pressure that will be put upon them to absorb the deductions made from their clients’ costs.

As it stands, the claimant is nearly always able to keep 100 per cent of his compensation, exactly as it should be. Most solicitors are then able to recover the majority of their costs from the insurance company and they waive any shortfall.

However, if the proposed changes take place, the client will have to pay the ‘after the event’ insurance premium, as well as the success fee, from his compensation. This could be a substantial sum. While it is stated that this will be capped at 25 per cent of the total award, this is a substantial deduction from his damages.

This clearly isn’t fair – on the victim or his lawyer. No win, no fee works as the firm takes the risk on each claim – if it loses it is not paid, but if it wins, it is awarded a success fee to balance the risk.

There isn’t enough consideration of these risks taken on by personal injury-focused law firms, or that they can work for two to five years on a serious injury claim with no financial reward, carrying a £1m-2m overdraft in the process.

What is more worrying about these proposed changes is that they will only lead to one inevitable result: the increasingly negative portrayal of solicitors in the media. Quite frankly, we will be viewed as heartless con-merchants, taking money from innocent victims.

This in turn will lead to huge public pressure for personal injury solicitors to stop taking compensation from victims and instead be told to carry that risk, in addition to their huge overdrafts. Still, at least the insurance companies’ profits will increase significantly, so we can all rest easy on that nugget of knowledge.

The other issue that comes to light with this new system is the massive number of legitimate claims that simply would not be taken on, particularly once the pressure above takes hold.

Some claims would simply be too risky for lawyers to feel comfortable taking, especially when the benefits of winning a case are so greatly reduced. It will drastically diminish a victim’s right to access justice.

Even more importantly, in cases of medical negligence, it will allow cases of minor medical negligence (possibly claims of up to £50,000) to continue unpunished due to the lack of financial viability of proceeding with these cases.

This will inevitably lead to standards dropping even more significantly, allowing the government to make even more savings both in compensation payable, National Health Service Litigation Authority (NHSLA) staff costs and not having to improve NHS standards, owing to the loss of any external monitoring or penalty to do so.

The whole debacle will damage the legal industry significantly, further damaging clients’ trust in the profession as a whole. It may also be the first step towards a non-fault medical negligence system, which will even more significantly damage the public’s right to access justice.

I find it both sickening and saddening that the government seems intent on bringing a significant part of the legal industry to an end as quickly as possible.

I feel it is time for personal injury solicitors to visit their MPs on a weekly basis to make it clear that they are not going to let these changes happen without a fight. My appointment is booked with Liam Fox, when is yours?

njervis@samsonconsulting.co.uk