No-Win All-Fee

‘There is a compelling case for reform of the legal costs system. The first thing must be to abolish conditional fees’

If you bring a successful compensation claim in the courts of England and Wales, you expect to take home all the damages you are awarded. That probably strikes you as perfectly natural: so long as the defendant complies with the court ruling, what you get is what he pays.

And yet there are many parts of the world where it would seem quite absurd. After all, your lawyer needs to be paid and there are plenty of other costs in bringing a claim. Where else will the money come from if not from your winnings?

In England, under the system of “costs shifting”, the losing party must usually pay most of the winner’s costs, except in tribunal cases. These costs have risen dramatically over the past 15 years. And if the loser is supported — either by insurance, by taxpayers or by shareholders — we all end up paying. One reason for this increase in legal fees was the government’s decision to stop providing public funding for personal injury claims, replacing it with an ill-considered no-win, no-fee system. Another was procedural change a decade ago — the so-called Woolf reforms that require lawyers to do more work earlier in the proceedings.

Sir Anthony Clarke, who as Master of the Rolls is the senior judge in charge of civil justice, was so concerned last year that he commissioned a fundamental review of costs. Clarke appointed Lord Justice Jackson, 61, a man of Stakhanovite energy and the only judge regarded as capable of reviewing the entire costs system and making recommendations for reform within a single calendar year.

Jackson started his research in January and published a preliminary report on 8 May. At 653 pages plus 30 appendices, it is an extraordinary achievement for one man to write with only the minimum of support. Jackson’s findings are open for consultation until the end of July and he will produce final recommendations before Christmas.

The consultation paper is pretty tentative. But Jackson finds little support for the US model, in which each side bears its own costs and claimants’ lawyers may take a percentage of the damages. He notes that the overriding concern of general counsel at Britain’s leading public companies is to avoid the introduction of US-style class actions. They “view with abhorrence a regime in which litigation is conducted as a speculative business by lawyers in the name of plaintiffs who are enrolled through advertising campaigns”. 

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