Think tank urges costs cap in 'no win, no fee' cases

Defendants that lose so-called ‘no win, no fee’cases should have the amount they pay towards legal cost capped, a leading think tank said yesterday.

Civil legal aid should be abolished for almost all compensation cases as the UK cuts the cost of its “risk-free, compensation culture”, the Adam Smith Institute said.

It called for a fundamental review of the funding of access to justice, saying civil legal aid provides “dubious value for money” and should be abolished in most cases.

Both the current system and no-win, no-fee arrangements are so biased in favour of the claimants, the think tank said, that they encourage people to ‘make a claim effectively risk-free”.

A new system within the no-win no-fee framework should be devised instead, it said, including a cap on the level of costs recoverable from unsuccessful defendants.

Tom Clougherty, the think tank’s executive director, said: “The current system of civil litigation in the UK is unfairly stacked in favour of claimants.

“We need to address the risk-free, compensation culture and the excessive costs it brings with it.

“The reforms we’ve proposed will save the taxpayer money while also ensuring a system of funding access to justice that is simple, robust and fair.

“It’s a win-win that the Government should be tempted to go for.”

Britain’s legal aid system is “the most generous in the world” and “fundamentally flawed” as the bias in favour of claimants encourages speculative litigation, the ASI report said.

Capping the additional costs borne by unsuccessful defendants, such as lawyers’ success fees and so-called after-the-event premiums – insurance taken out by one party against the risk of it having to pay its opponent’s legal costs – would significantly reduce the cost of litigation.

It would also “deter claimants from bringing weak cases with no risk to themselves, whilst preserving access to justice in the absence of civil legal aid”, the ASI said.

Lawyer Anthony Barton, the report’s author, added that the key recommendations of Lord Justice Jackson’s Review of Civil Litigation last year were impractical, unfair and not adequately costed.

Lord Justice Jackson’s proposals to abolish the practice of lawyers’ success fees and ATE premiums being recovered from unsuccessful defendants would require further legislation, he said.

And the recommendation to make costs payable by an unsuccessful defendant, but not by an unsuccessful claimant – in a bid to remove the need for expensive ATE premiums – would “open the floodgates to further risk-free, speculative litigation”.

A Ministry of Justice spokesman said: “We must consider how to make a more efficient legal aid system which is focused on those who most need it within the necessary financial constraints.

“We have announced the start of a fundamental look at the legal aid system.

“This policy assessment gives us the opportunity to take a fresh look across the whole system, to innovate and provide a value for money scheme built on sound foundations. We will be seeking views on proposals in the autumn.”

He said no-win no-fee style arrangements played a role in giving access to justice to a range of people, but added: “High costs under the existing arrangements have now become a serious concern.

“We will be consulting on how to achieve significant costs savings, whilst still enabling those who need access to justice to obtain it,” he said.

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