• Robert Spicer

Conditional fee agreements: a gimmick to secure justice on the cheap?

Conditional fee agreements (CFAs)

In April 2000 legal aid for routine personal injury cases was abolished and replaced by “no win no fee” agreements, involving the recovery of insurance premiums and success fees from the losing party. These schemes are borrowed from the United States.

It has been commented that there are growing concerns that these arrangements may not always be operating in the interests of justice. This appears to be a mastery of understatement.

It is generally recognised that solicitors will not take on a case under a CFA unless they estimate that there is a 70 per cent chance of success.

In 2005 the Citizens’ Advice Bureau made the following comments about CFAs:

  • Consumers were being misled by the term “no win no fee”.

  • They often found that the system cost them more than they gained.

  • They were subjected to high-pressure and aggressive sales tactics from non-lawyers employed by claims management companies.

  • Those companies were paid a fee by solicitors to whom they referred cases.

  • Consumers were not clearly informed of the financial risks involved in legal proceedings.

  • They were misled into believing that the system was genuinely “no win no fee”.

  • The reality was that consumers had to take out insurance policies to offset legal expenses incurred if they lost the case and had to pay the winning side’s costs. They were encouraged to take out loans to pay for these policies.

  • Private insurance companies charged according to risk. Clients with uncertain cases could face very high insurance premiums.

  • Legal expenses could be artificially inflated by claims management companies.

  • It frequently happened that injured persons did not benefit from the compensation they were awarded.

  • For example, the CAB dealt with a case where a woman was left with £15 from a £2150 compensation award, and another where a man received £1250 compensation but owed £2400 for insurance policies.

No win no fee can be described as “another gimmick to avoid state responsibility and to secure justice on the cheap”.

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