No Win No Fee. An End to Personal Injury “Ambulance Chasers”?

No Win No Fee.  An End to Personal Injury “Ambulance Chasers”?

An End to no win no fee personal injury “Ambulance Chasers” in the UK?

Across the pond, in the UK, there have been recent changes to the way that “no win, no fee” cases are funded.  A no win no fee personal injury arrangement is one where fees for a service provided are payable only after a favorable outcome (in the US these are commonly called “contingent fees”).

These legal arrangements cover an array of civil litigations, from car accidents to medical malpractice cases. Essentially, a lawyer who enters into a “no win, no fee” agreement with a client takes all the financial risk of a loss; only receiving payment if the case is won.

As an example, let’s say Betty Windsor goes into a National Health Service (NHS) hospital in London to have her right kidney removed. In a bungled extraction, the left one is removed instead. An innocent mistake? “Hardly,” says Betty, to her lawyer. “My surgeon was drunk, and the anesthetist was texting the head nurse throughout the operation. And, I can prove it.” The lawyer decides to take her case, making a no win no fee agreement, which means he will only be paid if the case is successful.

Betty goes on to win her case, and is awarded damages of £200,000 from the NHS. Previously, under the UK no win no fee legislation, the NHS would pay the damages, Betty’s lawyer’s legal fees, and also a success fee, an extra payment for the lawyer which is calculated as a percentage of the legal costs incurred.

Under the recent changes to the Legal Aids, Sentencing and Punishment Offences Act, claimants still don’t have to pay upfront fees or cover their legal costs if the case is lost: the changes only come into effect if the case is won.

Now, instead of the NHS paying the lawyer’s success fee, it is Betty who must pay this fee (which has been capped at no more than 25% of the damages awarded).  This means that Betty would have to pay up to £50,000 of her awarded damages to her lawyers as their “success fee.”

Ken Clarke, UK Justice Secretary, has said that these changes (particularly the capped rate of the success fee) will act as a disincentive to spurious cases.  Other supporters of the changes claim it will reduce the ambulance-chasing culture that has flourished in the UK over the past 15 years.

Critics, including The Law Society and Amnesty International, say the changes will disproportionately affect the most disadvantaged members of society.  They argue that people who don’t have the money to pay upfront legal fees (including people from other countries) will now have less chance of convincing lawyers to take a risk on running their case.

The changes in the UK laws for no win, no fee personal injury suits bring their contingent fees arrangement closer to the current US model, under which successful claimants pay a certain percentage (usually 33-45%) of awarded damages to their lawyers.  However, the arrangements still differ in that UK law caps the lawyer’s “success fee” at no more than 25% of the damages awarded.

no win no fee

no win no fee

Further information:

UK Ministry of Justice  - Main Changes

The Telegraph - End of ‘no win, no fee’ lawsuits

The Guardian – Amnesty warns UK ‘no win, no fee’ changes will prevent human rights suits

 

 

2 Comments

  1. EagleFee LLC  /  July 1, 2013, 12:02 pm Reply

    The problem with capping the percentage fee charged is twofold. First, the cap is likely to become the standard fee much as 33 1/3 % is in the U.S. Second, claimants with less desirable cases, those representing smaller potential awards or with unclear liability, will be unable to find legal representation.
    A far more sensible approach than that adopted in the UK is to base the percentage fee charged a client on the merits of the individual case. Cases representing the least risk to the lawyer and the greatest reward in terms of monetary damages will command a smaller contingent fee than more difficult, time intensive or less lucrative cases.
    Eaglefee.com is an open forum that allows claimants to market their cases directly to numerous lawyers who then compete for the case through their qualifications, insight and percentage fee charged. Eliminating referral fees removes an inefficient tax incorporated into the standard fee and allows lawyers to charge clients less without hurting their bottom line.

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