When I met DAS last week to discuss their sponsorship of my blogreaders' party at the party conference on Tuesday, they told me about a subject which hadn't crossed my radar screen before. This is the fact that the Ministry of Justice seems determined to introduce US style contingent fee arrangements into litigation in England & Wales. In a dim and distant past I used to be an insurance reporter for Lloyd's List and I remember writing about legal expenses insurance, which in those days was in its infancy.
There is a fundamental principle in England & Wales that whichever side loses litigation, has to make a substantial contribution to the winner’s costs. This Adverse Costs principle ensures early settlement of claims which have clear merit and gives a commercial incentive to both sides to act reasonably, deterring claimants from bringing and defendants from defending actions they are likely to lose.
The highly controversial Jackson Review appears to seek to introduce a US contingent fee litigation culture where individuals can bring claims with no financial risk to themselves, resulting in an escalation of claims, many of them vexatious or without merit. And now to general amazement, the MoJ seems determined to press through this fundamental change.
In the complete (and understandable) absence of Legal Aid, the current reality for claimants seeking compensation for injuries or wrongs is that it is a tough struggle. Claimants have to accept liability, win or lose, to pay lawyers at least part of their fees or outgoings and to make provision for the possibility of losing and having to pay the other side’s costs. The insurance market has produced a number of insurance products designed to address these risks, all of which the Jackson Review, seeks to sweep away, in favour of contingent fees. God help us!
Access to justice and the rule of law are the hallmarks of a civilised society. Private funding of litigation is outside the financial capabilities of most individuals. Any system of justice must make legal representation affordable and mitigate the risk of the individual to their own and their opponent’s costs. Surely this can be done without importing to this country the funding basis of the excesses of US litigation culture. If Lord Young’s report to David Cameron, due to be published next week, concludes that there is a compensation culture in this country which needs addressing, implementing these reforms will backfire with catastrophic results for the public purse – not least the National Health Service Litigation Authority.
I know there are many lawyers and insurance industry bods who read this blog. What do you reckon to this. Are these fears well grounded?