Extension of Civil Justice (Hansard, 26 October 1988)

§ Mr. Quentin Davies (Stamford and Spalding)

I beg to move,

That leave be given to bring in a Bill to permit the conclusion of agreements between solicitors or barristers and their clients in civil cases under which the latter may be represented on a contingency fee basis, and to remove all restrictions inhibiting such practice. Many of us are very proud of our system of justice, and we are right to be proud of most aspects of the system. However, there is one aspect of our civil justice system that rightly calls for the concern of this House. Quite simply, the problem is that too few people have access to it.

If one is a multi-millionaire there can be little difficulty in commissioning all the legal services required. If one is poor enough to qualify for legal aid, that assures representation—although not necessarily exactly the sort of representation that would be chosen if one could pay for it. However, for the broad mass of the population who fall between those two categories a decision to seek justice by going to law is, in effect, a decision to toy with the risk of financial catastrophe for both that person and his family. The cost of litigation has become so high that a few days in court can wipe out—or even more than wipe out—all that a hard-working man or woman may have accumulated throughout a lifetime.

That position is most unsatisfactory and we should do something about it. It is unsatisfactory for two reasons —first, for those who lose because they cannot go to justice when they are entitled to do so and are therefore denied the justice that they would otherwise have. I think of the victims of accidents—perhaps of transportation companies, both public and private, which have been operating in breach of safety procedures—

§ Mr. Davies

One thinks of libel, the victims of professional negligence, the victims of medical negligence, and the victims of flawed pharmaceutical products. All such people, if they fall within the broad mass category of the population, would find it exceedingly difficult and risky to go to law.

Some hon. Members may already be afraid, and some hon. Members may hope, that I am about to propose some measure arbitrarily to reduce the cost of litigation and to reduce legal fees by legislative fiat. I reassure hon. and learned Members who may be concerned about my intentions that they are certainly not of a nefarious and villainous kind. My proposed solution is far better. It is simply that, when they wish and when their clients so choose, lawyers should be allowed to come to an arrangement to represent their clients, whether as solicitors or barristers, on the basis of contingency fees. That is to say that a solicitor or barrister would agree to take a pre-arranged share of any damages that his client might be awarded in the event of his suit being successful. In the event of failure, he would take nothing—no win, no fee.

I emphasise that what I am proposing is a purely permissive measure. It is not prescriptive in any way. It would be open to lawyers and their clients to continue to come to an arrangement on the basis of their conventional time-based fees and other fees that operate at present. But let us make no mistake about it: my Bill would outlaw 301 —perhaps I should say disbar—the restrictive practices currently operated by the Law Society and by the Bar Council that prevent their members from coming to that arrangement even when they might wish to do so.

I shall deal briefly with the objections that are sometimes raised in respect of contingency fees. The first is that it would undermine lawyers' objectivity. That is a strange objection. Our whole system of adversarial justice is based on the recognition that lawyers are not objective —they are on the side of their clients, and quite properly so—and that it is their obligation to pursue their clients' interests with all the energies and skills at their disposal as far as they can within the law. That is an important qualification.

The obligations of lawyers to the law and the formal responsibility of barristers to a court would not be changed in any way by the proposals in my Bill. I would regard it as an extreme and unacceptable slur on the legal profession to assume that, because lawyers are materially indifferent to the results of their actions on behalf of their clients, they are less loyal to their clients than they would be under a contingency fee system.

The second objection is that contingency fees would bring forth an escalation of damages awarded in civil cases. That objection is based on a false analogy with the system in the United States and the confusion between two quite separate and distinct features of the United States legal system. They have contingency fees in the United States, but they have something else which we do not have and which I would not seek to introduce, and that is juries fixing damages. Juries fixing damages, not contingency fees, have led to the great inflation of damages in the United States.

Under my proposals, arrangements for lawyers' remuneration and the formula used by a lawyer to arrange his remuneration with his client would remain as it should be—entirely irrelevant to the principles on which a jury fixes damages.

A third objection to contingency fees is that they would bring forth a great deal of unnecessary and purely vexacious litigation. That objection rests on the most pessimistic assumptions about either the level of competence or the rationality of the legal profession. 302 Surely, unless one makes the most perverse assumptions about lawyers—I have the highest regard for their professional competence and rationality—the effect of my Bill would be exactly the reverse. No lawyer in his right mind would take on a contingency fee basis a case which was purely frivolous or any case other than one which he had a good chance of winning, and so was, in his professional judgment, a good case.

My Bill would abolish the conflict of interests between lawyers and their clients that exists under our present system. It is without a doubt a purely theoretical conflict, but under the present system a lawyer being indifferent to the result of a case might be considered to have an incentive to push his client to pursue a frivolous or hopeless action because he would nevertheless receive a fee. That is a purely theoretical danger, and I do not suppose for a moment that any lawyer has ever fallen victim to that temptation. The integrity of the legal profession has been and undoubtedly will continue to be more than proof against such temptation. Nevertheless, it is better to abolish a temptation than to resist it. That is the principle which we as legislators should adopt in this case.

My Bill would promote the interests of justice and the confidence of the British people that they will have access to civil justice if ever they need it. It would be in the interests of lawyers and their clients, and I have great pleasure in commending it to the House.