Justice secretary Kenneth Clarke announced 'radical' proposals to reform the way no win no fee claims are pursued yesterday.
At the moment, the legal fees solicitors can claim in 'no win no fee' cases are claimed from the losing defendant and are entirely separate to any damages that are awarded. The new proposals will see the legal fees in cases being taken out of the awarded compensation, therefore reducing the damages that the claimant would actually receive.
The aim of the proposed reform is to tackle the so-called 'compensation culture' in the UK. The flip side of this, of course, and the concern for us as solicitors who regularly handle personal injury cases on a no win no fee basis, is that people who have legitimate and justifiable claims for injury suffered at the hands of another may not obtain the proper redress for the wrongs that they have endured.
As a personal injury solicitor, with many years of experience in assisting clients in claiming damages for accidents and injuries, I was asked to comment on the proposed changes. You may have heard me speaking about the subject on Jeremy Vine's Radio 2 show, or indeed Brett Davidson's drive time show on BBC Radio Lancashire.
During the Radio 2 interview, Jeremy Vine (obviously) played devil's advocate, suggesting that reforms may be necessary and highlighted cases from the media whereby individuals have been known to exaggerate their claims in order to obtain greater levels of compensation. Whilst we have all heard of these isolated cases and they are a cause for concern, they are few and far between.
The media will always love a salacious headline, and will fuel the line of solicitors as 'ambulance chasers' and the UK becoming a 'compensation culture' by focussing on these minority cases, yet there are hundreds and thousands of legitimate claims to be made.
In the absence of legal aid funding for personal injury cases, the concept of 'no win no fee', or 'conditional fee arrangement' allows us to take on cases whereby the claimants could not ordinarily afford to privately instruct a solicitor and by doing so we can obtain compensation for those deserved individuals who sustained injuries through no fault of their own.
Compensation awards are calculated on the basis of many factors including loss of earnings due to time taken off work, including forecasted loss of future earnings, any medical treatment (both initial and ongoing) required, damage to personal property as a result of the accident (eg. repairs to vehicles in road traffic accidents), compensation for any lasting injuries and in some cases, psychological trauma.
If the Jackson reforms are implemented, it will force winning claimants to pay solicitors out of their own damages. Whilst shifting the burden from the defendants, the reforms will have a devastating effect on the level of damages received by the innocent claimant.
Under the proposed reforms, solicitors will additionally no longer be able to recover after the event insurance from losing defendants, solicitor's success fees will be capped at 25% in personal injury cases, contingency fees will be permitted and it is proposed that general damages will raise by 10%.
The Justice Secretary also unveiled a consultation on many additional proposals, most notably extension of the fixed fee regime in road traffic accident cases; greater emphasis on settling cases before Court through mediation; increasing the current small claims limit from £5,000.00 to £15,000.00.
No doubt we as solicitors will adapt to the reforms once implemented but what remains unclear is how they will affect the interests of the innocent, injured and wronged.