No win no fee: is the reality no fee no win?
“No win no fee”
“No win no fee”, in reality, is a grotesque over-simplification which reflects the naïve innocence of clients. It has developed into an impenetrable jungle of regulations and procedures, mostly concerned with insurance premiums and payments. There is also a significant body of case law dealing with CFAs and their insurance implications.
In outline, a solicitor assesses the chance of success in a case and decides on a success fee to be paid on top of normal fees if the claim succeeds.
This includes the cost of an insurance policy to cover costs if the claim fails.
The introduction of CFAs is another example of the commercialisation of legal practice. CFAs make it less likely that poor claimants with cases which are not overwhelmingly likely to succeed will be able to find professional representation. Claims with a significant risk of failure are not taken on.
In 2009 a study by Oxford University concluded that the use of CFAs in defamation cases (essentially, libel) made such cases 140 times more expensive in England and Wales than in other European countries. Defendants who lost defamation cases faced a doubling of reasonable costs against them. Media outlets were being forced to settle claims because of the financial risks of fighting such cases. CFAs in defamation cases enabled lawyers to charge up to twice their normal fees of up to £800 an hour. The study made the point that media companies were being forced to self-censor because they had no economic incentive to defend defamation claims. Where the claimant had the benefit of a CFA, there was no longer any incentive to control the amount of work being done. This distorted the normal costs control mechanism and potentially breached Article 6 of the European Convention on Human Rights (the right of access to justice) and Article 10 (freedom of speech).
Compensation in libel cases assesses a person’s reputation as if this was a commodity. The valuation of a person’s reputation in money risks undermining the very thing which the law seeks to restore, namely the intangible good name of the injured person. The law of defamation is fundamentally geared towards financial compensation.
English law imposes a monetary value on injuries. Although there are a number of non-money remedies available in the employment tribunal, they are rarely ordered. Employment tribunal claims, like the vast majority of civil claims, are mainly about money.
What is the client’s ultimate aim? If it is financial compensation, then the system functions. If it is otherwise, for example to “obtain justice” or to “have a day in court”, the procedural aspects of the case become highly problematic.