Kenneth Clarke MP Proposes Shake up of 'No Win No Fee' Fees System in England and Wales
In December 2009, Lord Justice Jackson completed his comprehensive Report of Civil Litigation Costs which was commissioned by the former Master of the Rolls Anthony Clarke in 2008. In it, he aimed to “propose a coherent package of interlocking reforms, designed to control costs and promote access to justice”. (pg. i)
It is against this backdrop, that on March 29th 2011, the Justice Secretary Kenneth Clarke MP delivered his statement to the House of Commons, in which he outlined the Governments response to Lord Justice Jacksons’ recommendations for reforming no win no fee arrangements.
He began by stating that he wishes to put an end to the disproportionate costs that are out of all proportion to the dispute or the claim, aiming to “stop the perverse situation in which fear of excess costs sometimes forces defendants to settle, even when they know they are in the right”.
To combat this, Kenneth Clarke proposes capping ‘success fees’ charged by solicitors at 25% of the compensation awarded, and also raising the total compensation awarded for such claims by 10%. He also plans to implement Lord Jacksons’ proposals to end recoverable ‘success fees’ and insurance fees so that these costs will no longer be paid by an unsuccessful defendant. The MP hopes that making claimants pay fees from their compensation will encourage accident victims to “take an interest in controlling the bills being run up on their behalf by expecting them to pay their own lawyers’ success fee”.
However, in his statement, Kenneth Clarke made no suggestion that the Government plans to also cap or scrap the controversial ‘referral fees’ often paid to accident management companies, and even clients in return for a claim. ‘Referral fees’ hit the headlines earlier March this year when the Transport Select Committee harshly criticised their use in acquiring road traffic accident claims, describing a “merry go round” of payments that are made to those concerned following a motor vehicle accident. It blamed referral fees for increasing insurance premiums as personal injury claims account for over 50% of money paid out by insurance companies.Continued on the next page