No Win/No Fee Litigation: Consequences (Hansard, 28 September 2000)

§ The Lord Chancellor (Lord Irvine of Lairg)
My Lords, two university research studies have shown that success fees are being set at fair levels and that clients are satisfied with them and with the damages they 938 receive. The average mark-up was found to be about 47 per cent, recoverable from the unsuccessful defendant. There is some evidence that success fees are falling under competitive pressure.
Additional research is in progress conducted by three universities. There will be an interim report in December and the final report in September next year. There is no evidence of an increase in contested litigation since conditional fee agreements were introduced. On the contrary, there are more settlements due both to the civil justice reforms and conditional fee agreements.
Employer defendants have always insured against litigation and litigation is not increasing. Under legal aid, successful defendants did not recover their costs from legally aided plaintiffs. Where legal aid has been replaced by conditional fee agreements, they do. That therefore removes an injustice to successful defendants.

§ Lord McNally
My Lords, I thank the noble and learned Lord for that Answer. Does he recall that I asked this Question some five months ago, prompted by the excessive television advertising of companies offering help for litigation? Since that time the number of companies advertising and the scale and intensity of that advertising has increased. That is expensive advertising paid for by someone—I wonder who. Has the noble and learned Lord the Lord Chancellor had any talks with the Independent Television Commission about this kind of aggressive advertising and its effect on litigation? More broadly—I thought that the reply he gave last March was a tad complacent—does he have no concern that this kind of no win/no fee litigation will drive our professions (other than the lawyers, of course) and our service industries into the same state as in the United States where the first concern is fear of litigation rather than service to the consumer?

§ The Lord Chancellor
My Lords, I know it is claimed that CFAs encourage ambulance chasing, but the whole point is that they are no win/no fee agreements. Lawyers will make a profit only if they bring strong cases. That is why trade union solicitors run efficient, profitable businesses on this basis. I believe that CFAs and litigation insurance has brought hundreds of thousands of people with strong cases into access to justice who formerly did not qualify for legal aid. Provided claims management companies are taking on good cases—which is what they will do in their own interests—advertising extends access to justice.
As regards organisations such as Claims Direct, no one has suggested to me or to my department that the content or presentation of the advertising is in any way improper. I should, of course, be concerned if that were so. This is a matter which the noble Lord could take up with the Independent Television Commission, or indeed with the Advertising Standards Authority, the chairman of which, the noble Lord, Lord Rodgers of Quarry Bank, is the leader of the noble Lord's party in this House.

§ Lord Tomlinson
My Lords, I ask my noble and learned friend the Lord Chancellor a simple supplementary question: is he saying clearly that conditional fee agreements increase access to justice?

§ The Lord Chancellor
My Lords, I say that unquestionably. They bring hundreds of thousands of people into access to justice for the first time. Traditionally in this country only the very poor on legal aid or the very rich could afford to litigate because if they lost they could not afford the costs involved. Middle income Britain can now bring forward strong claims under conditional fee agreements. I also believe that a stronger settlement culture is taking root both as a result of the civil justice reforms and of conditional fee agreements.

Lord Renton
My Lords, are conditional fees reducing the cost of legal aid and, if so, to what extent?

§ The Lord Chancellor
My Lords, no, the legal aid budget remains at £1.6 billion a year. Conditional fee agreements have enabled a refocusing of the sums spent on legal aid, not a reduction.

§ Lord Clement-Jones
My Lords, will the noble and learned Lord confirm that the changes have promoted more settlements at the expense of court litigation?

§ The Lord Chancellor
My Lords, weak or trivial cases do not go forward under conditional fee agreements as, it has to be said, they did on legal aid. The strength of the cases that go forward, combined with the liability of the unsuccessful party for the costs plus the uplift, promote more settlements. Also, the civil justice reforms, often known as the Woolf reforms, are having a similar effect. Independent research shows that 89 per cent of lawyers favour the reforms; and there is greater co-operation between the parties, faster resolution of claims and a less adversarial atmosphere in the courts.

§ Lord McNally
My Lords, I still see a tinge of complacency in the noble and learned Lord's answers. Does he admire the state of litigation in the United States? Time will tell whether he is right, or I am. I suspect that in 10 years' time many of our services will be as paralysed as they are in the United States.

§ The Lord Chancellor
My Lords, the noble Lord must appreciate the big difference between practice in this country where we have conditional fee agreements in civil cases tried by judges alone and that in the United States where juries try civil claims with all the sympathy for plaintiffs that that entails and where contingency fees apply under which the plaintiff's solicitor gets, as we call it, a slice of the action as distinct from an uplift on the fees.