No-win, no-fee lawyers have played a prominent role in employment tribunal proceedings for the past decade, but now the Ministry of Justice (MoJ) plans to curb their influence and the fees they can claim.
Such moves have received a mixed reception from the legal community. High-profile lawyer Stefan Cross, who has conducted many public sector equal pay cases on a conditional fees basis, condemned the plans as “a nasty piece of work designed to drive us out of business”.
The MoJ’s proposals, which form provisions in the Coroners and Justice Bill currently before Parliament, will regulate damages-based agreements by including a cap on the level of charges recoverable from claimant’s damages. It estimates that charges currently range from 10% to 40%.
The proposals will also stipulate that legal representatives provide transparent information on total costs and deductions made from the award, which will be their fee for taking on the case. They will also require no-win no-fee lawyers to provide explicit information on alternative methods of funding.
“The time has come for these arrangements to be subject to proper regulation to protect the interests of consumers, and that is what the government will legislate to do,” said justice secretary Jack Straw.
However, the Law Society was sceptical of the need for such a clampdown.
“We are unaware of any evidence [in employment work] which shows that clients have been disadvantaged by no-win, no-fee arrangements,” said Mark Stobbs, the society’s director of policy.
He pointed out that the government introduced the concept of no-win, no-fee work into the wider justice system in 1999, and that it has helped those not eligible for legal aid to obtain justice.
“Such arrangements are particularly important in the employment tribunal where the normal ‘loser pays’ rules on costs do not apply. For most clients, the costs of a case will inevitably come out of the damages they obtain,” he said.
Stobbs added that solicitors are already subject to strict rules about client care and should be differentiated from employment advisers who do the same work using no-win, no-fee arrangements, but who are not regulated.
“The Law Society thinks it is important that all those offering these services to clients should be subject to a level playing field and that any changes to the regime should not restrict access to justice,” he said.
Cross thinks that trade union pressure, driven by their need to boost recruitment, has prompted the MoJ’s proposals.
“The consequence [of the proposals] could be that those who don’t have access to unions will be denied legal representation,” he said.
Meanwhile, public services union Unison has welcomed the MoJ’s initiative. It wants no-win, no-fee solicitors to be obliged to give information about alternative sources of funding, such as via trade unions, before any client agreementissigned.
Unison’s general secretary, Dave Prentis, said: “No-win, no-fee lawyers must be obliged to tell claimants, before they sign contingency fee agreements, if they can get the service free from their trade union, and costs charged must be reasonable and justifiable.”
The MoJ is publishing a consultation paper soon, which will set out details of the regulatory requirements.