No Win No Fee Claims
Are no win no fee cases costing too much?
A review by Lord Justice Jackson has divided experts in the compensation claims industry. In his report, he recommends that lawyers in no win no fee cases should no longer receive a ‘success fee’ on winning a claim, but should, instead, take a share of the damages. He said that, “there is too much money swilling around in the personal injury compensation process.”
Those who argue against no win no fee claims solicitors suggest that they charge too much and have often brand claims solicitors as ‘ambulance chasers’. Currently, the losing defendants must pay for the cost of the winning lawyers’ ‘success fee’, as well as costly insurance premiums. This can leave them with a bill that is four times the size of the cost of the initial action. No win no fee lawyers have also been accused of ‘cherry-picking’ the cases that will allow them to charge the biggest success fees and earn them the most revenue. Lord Justice Jackson says that he feels solicitors should compete on who would take the smallest share of a client’s payout rather than paying out to ‘buy’ the case. However he has recommended a cap of 25% as a guideline. He also suggests a 10% increase in payouts so that claimants are still properly compensated, should his recommendations become law.
An angry response
Many no win no fee claims solicitors have responded angrily, saying that they only choose cases on their legal merits although, it follows that the ones with the largest fees involved are usually the most deserving. They argue that the proposed changes will phase out the need for referrers, resulting in a more aggressive marketplace that relies more heavily on advertising which, in turn, could see the end of smaller law firms who are unable to match the advertising campaigns of larger firms. In addition, they feel that the proposals could make it harder for people to seek representation, as solicitors become choosier about the cases they decide to undertake.
Nicholas Jervis, Managing Director of compensation specialists, 1stClaims, says he can see both sides of the argument. “I believe that most solicitors are fully aware that they are employed by their clients and have their clients’ best interests at heart,” he explains. “Solicitors with good reputations, who have built their businesses on delivering a top-quality service will have little to worry about. While larger firms might be able to afford flashy images, there is nothing more affirming than a good reputation, he says.”
Nicholas’ view of the compensation claims system is that it is constantly evolving. “What’s good right now may well be frowned upon in the future,” he says. “Any good solicitor will be able to adapt, because the fundamentals of justice will always remain the same”.
So far, the government has not examined Lord Justice Jackson’s review, although it has promised to consider the ‘significant recommendations’. Until it does, the debate between the supporters and detractors of the no win no fee system will continue.
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