UK Legal System Affected by No Win No Fee

In the past ten years the advertising of No Win No Fee claims by insurance companies featuring mundane accidents has become unavoidable. Everyday minor injuries such as whiplash, slipping or falling are constantly on our television sets.

The message these adverts try to portray is the following: you can take legal action to right a wrong with very little risk of incurring costs. By simply dialling an 0800 number you can be well on your way to a healthy cheque as well as exacting retribution on a careless employer or branch of government. The age-old stereotypes of hiring a solicitor where the claimant’s first port of call is a dusty office over a shop is long gone out the window.

What has caused this relatively dramatic change? The most likely answer seems to be conditional fee agreements (CFAs), or no-win no-fee deals, first introduced by Tony Blair’s government in 1997.

Back then, minister Geoff Hoon stated: "No-win no-fee conditional agreements will result in better access to justice. Access will be given to the many people who fall between those who are very rich or those who are so poor that they qualify for legal aid.

"In future, the question of whether one gets one's case to court will no longer depend on whether one can afford it, but on whether one's case is a strong one."

The 1999 Access to Justice Act, which came into force in April 2000, dramatically increased the attractiveness of no-win no-fee deals as judges could make the losing side pay the extra costs due in ‘conditional fee’ cases. These uplift fees charged by solicitors are an increase on normal fees to compensate for the possibility of loss and the consequent lack of fee, and also the insurance premiums paid to protect against the other side's legal costs in the event of defeat.

Legal aid for personal injury cases was abolished too, making a conditional fee agreement many people's only hope of justice. The changes in the law have fuelled much of the negative press stories about the legal industry, particularly in its most featured sector, personal injury.

Headlines like "Legal 'vultures' are making £2m out of the NHS each week" or "Compensation culture is killing equestrianism" or "Compensation culture wrecking small firms" have triggered the public's imagination. It is persistently suggested that grasping lawyers vastly inflate their fees for no-win no-fee cases, leading to a drain on the public purse.

Martin Bare, outgoing president of the Association for Personal Injury Lawyers, denies this. "There is no gravy train. The perception arises because people don't think that for the cases that you win, there's another that you lose, for which you get nothing."

Lawyers blame this public perception of the compensation culture at the door of claim management firms. Usually these are not staffed by solicitors, and instead act as middlemen, passing clients on to lawyers. The changes to the law made it desirable to advertise their services on television.

"That then gave them a model where they could afford to bombard you and me with endless advertisements," says Mr Bare. "That is what makes people believe that there is a compensation culture."

However, the statistics of personal injury claims do not necessarily back up the idea of a compensation culture. Cases involving accident and disease are notified to the Compensation Recovery Unit of the Department for Work and Pensions, as part of efforts to recoup disability benefit and NHS treatment costs from the party responsible from the injury.

However the figures have been relatively stable. The number of cases registered to the unit in 2000/1 was 735,931. The number in 2007/8 was 732,750.