‘No win, no fee’* arrangements will change from 1st April 2013
Conditional Fee Arrangements, known as ‘no win, no fee’*, were introduced in 1999 to replace legal aid for personal injury cases. A claimant enters into a no win, no fee* arrangement with a solicitor, which means that if the case is successful, the respondent pays the legal fees of the winning side. Sometimes a “success fee” is negotiated by the legal representative in addition to the ‘no win, no fee’* arrangement. The success fee is payable on top of the legal fees, but it cannot be more than 100%. Traditionally, the losing side has met these costs, although a successful claimant may still have to pay other disbursements such as court fees, if the case goes to court, and the cost of the independent medical examination.
Under the changes in the new law, Legal Aid, Sentencing and Punishment of Offenders 2012, coming into force from 1st April, winners of ‘no win, no fee*’ cases will have to pay up to 25% of the success fee out of their award. This could be a significant sum of money and anybody who is certain they wish to start a claim should act before the law changes.
The government’s motive in making the changes is to try to slow down the upsurge in personal injury cases, chiefly for whiplash claims resulting from road traffic accidents. Whilst nobody quarrels with initiatives to keep the cost of car insurance premiums down, there is concern that poorer people will find it hard to have access to justice because some cases will not be viable to pursue.
In particular, some legal organisations are concerned about the negative impact on pro-bono firms (solicitors who provide services free to contribute to the community), because they will not be able to recover enough fees to cover the costs of the case. The award of costs is always discretionary and there is no guarantee that a judge will automatically award costs to the winning side. However it remains to be seen, as with every change in the law, how the new rules work in practice.