Tipping the scales against legal aid
Tom Clougherty 3:15pm
Britain’s legal aid system continues to fail, and should be abolished for
virtually all compensation claims. Reformed Conditional Fee Agreements (CFAs for short) should take its place. Those are the headline recommendations of the Adam Smith Institute’s latest report, written by legal expert Anthony Barton.
It’s not difficult to point to problems with legal aid, but the main one is that it encourages risk-free, speculative litigation, and fuels a costly compensation culture. The fact that
claimants receiving legal aid are not responsible for defendants’ costs if their case is unsuccessful essentially puts them in a no-lose situation. Defendants, on the other hand, just
can’t win – they’re going to be out of pocket whatever happens.
There’s a financial imperative too: the government needs to save every penny it can find. But you can’t be short-sighted about this. Legal rights are only meaningful if they can be
asserted, and few people can afford the up-front costs involved. So we do need a system that ensures access to justice. It just needs to be one that doesn’t require taxpayers’
money.
CFAs – popularly known as “no win, no fee” agreements – offer an attractive alternative. Indeed, it is largely due to the rise of these arrangements over the last ten years
that such a strong case for scrapping civil legal aid can be made. But “no win, no fee” litigation has problems of its own. And I’m not just talking about those ghastly daytime TV
ads.
In fact, CFAs have the same fundamental flaw as legal aid: the balance of litigation risk is severely distorted in favour of claimants. Lady Justice Smith has admitted as much in the Court of
Appeal, recognizing that the current system allows would-be claimants to “litigate weak cases without any risk themselves”. We’ve all heard stories that confirm that point of
view.
This issue largely stems from the additional costs of litigation, specifically lawyers’ success fees and after the event (ATE) insurance premiums, which cover claimants against the costs of
bringing an unsuccessful action. Both these additional costs are borne by unsuccessful defendants, but neither is usually paid by unsuccessful claimants. That creates a clear incentive for lawyers
to charge the highest possible success fees, and drives rising prices for ATE insurance premiums. It also means that litigation is far riskier for defendants than for claimants. Even leaving aside
any damages payable, they stand to lose far more by having their day in court.
The simplest solution is to cap the level of additional costs that can be recovered from unsuccessful defendants. That would deter claimants from bringing weak cases with no risk to
themselves, while still preserving access to justice in the absence of civil legal aid. Cost sharing would also encourage claimants to negotiate lower success fees with their lawyers, and stimulate
greater competition on price in the ATE insurance market.
From the government’s perspective, it’s a win-win. They save money, crack down on vexatious litigants and venal lawyers, and still ensure that deserving claimants have the resources to
go to law. They will be tempted to go for it.
Tom Clougherty is Executive Director of the Adam Smith Institute.
Previous
yank
August 26th, 2010 3:58pm Report this commentAnd here's silly me thinking that you all had an ethic of "loser pays" across the board.
I shouldn't ever have come to this Spectator site, as it appears that all of my romantic dreams of a sane Mother England are crashing down... one-by-one. It seems you lot engender litigation, only slightly differently than us.
The ASI seems to have some good ideas though. Loser pays, with a cap, might be a good idea, and I wish we'd go that route here. It seems a fair compromise, and gets the government out of the loop to some extent. The claimants would be disincentivized to jackpot justice and spurious litigation. The little guy could get his day in court, within a system not biased towards irresponsibility.
And keep it simple. Eliminate "success fees". The court should simply issue a sum of damages, a dollar/pound amount, and the claimant and his counsel can split that up however they want. The loser can absorb his own legal fees, and if he'd wanted to avoid those, he should have settled earlier. The winner has his sum to split up as he sees fit. Fair enough?
However, you should expect those of the pettifogging persuasion to fight you tooth and claw over this, as here. They love jackpot justice, and will pay to keep it.
TomTom
August 26th, 2010 4:02pm Report this comment"The fact that claimants receiving legal aid are not responsible for defendants’ costs if their case is unsuccessful "
It is almost a version of Crown Immunity. It would be better to have lawyers' fees standardised and codified as in Germany with BRAGO and to set budgets for all Court Cases with Variances to be explained to a Comptroller
Nickle
August 26th, 2010 4:15pm Report this commentThere is also a need for CFA style class actions.
If we take Local Authorities. It's increasingly being discovered they have been fining people illegally.
Now to keep the money is theft, but they are taking the view if people don't claim, and we're not going to publicise it anyway, we get to keep the cash.
CFA based class actions will deal with this abuse.
JB
August 26th, 2010 4:15pm Report this commentThere are a number of problems with the complete abolition of civil legal aid, but a couple will suffice for now:
- Lawyers take cases on a CFA basis only when the odds are stacked in favour of them winning. It is often very difficult indeed to make that analysis at the early (or even the late) stages of many civil claims outside of the sphere of personal injury. No lawyer worth their salt will take on a case on a CFA with no firm basis for expecting to be paid for their work.
- Replacing civil legal aid with CFAs would place defendants requiring representation but unable to afford it in an absolutely awful position, trying to find a lawyer prepared to defend them against a claim that may or may not succeed.
ndm
August 26th, 2010 4:34pm Report this commentAdam Smith is probably turning in his grave reading the following guff from Tom Clougherty:
-- It’s not difficult to point to problems with legal aid, but the main one is that it encourages risk-free, speculative litigation, and fuels a costly compensation culture. The fact that claimants receiving legal aid are not responsible for defendants’ costs if their case is unsuccessful essentially puts them in a no-lose situation. Defendants, on the other hand, just can’t win - they’re going to be out of pocket whatever happens.
This has absolutely nothing whatsoever to do with legal aid as anyone even remotely familiar with the far more litigious American legal system would understand. I suspect that the real goal of the Adam Smith Institute is to ensure that the law and recourse to it is available only to the wealthy.
startledcod
August 26th, 2010 5:11pm Report this commentA significant proportion of CFA cases are brought in he personal injury field and it is those egregious TV commercials are targeting. Quite often defendants will settle a case rather than go to Court because, as the post points out, they are in a lose lose situation. Not fair at all and a weakness that I am sure CFA take into consideration when assessing whether to take a case on and then exploit ruthlessly.
In Scotland in criminal trials in addition to the 'Guilty' and 'Not Guilty' verdicts there is a third option, 'Not Proven'.
With personal injury claims the Claimant is trying to demonstrate someone else's negligence/failings when, and we are all aware of seemingly crazy cases (e.g. the woman who successfully sued McDonalds when the cup of coffee she had wedged between her thighs in the car burnt her thighs) which would probably not have been brought if a third verdict were introduced; that it was an accident.
Better minds than mine could produce legal definitions of what constitued an accident. In the event that the verdict was 'an accident' then the matter of defendants fees would still have to resolved but. However, the introduction of the third verdict would have two effects, reduce the number of frivilous cases as CFA lawyers could see that there were now two verdicts that would not pay out and secondly, embolden defendants to actually defend themselves rather than settle.
The third verdict would not disadvantage genuine claimants as they would still win.
justathought
August 26th, 2010 5:56pm Report this commentI am all in favor of abolishing legal aid but for a different reason to those already given.In my experience a is that a great deal of anti-social behavior is facilitated by the present system. Many housing disputes are now being 'resolved' through the legal aid system for which it was never intended. For example social housing tenants on benefits know that if they misbehave and a repossession order is instigated against them then they automatically are eligible for legal aid. The taxpayer pays three times over, first in housing benefit, then in council tax bring a case against the offenders and lastly by the state legal aid in defending the possession order (exchange this for any other anti-social behavior order).
The social housing and many other miscreants are a wiley lot and once they know that they cannot receive legal aid then they will moderate their behavior or face the consequences. That way law abiding citizens who work will not feel at a disadvantage over the feckless legally aided.
Greg Wallace
August 27th, 2010 10:42am Report this comment"That creates a clear incentive for lawyers to charge the highest possible success fees, and drives rising prices for ATE insurance premiums"
Mr Clougherty will find that it is not the case that a lawyer will simply think of a number (and perhaps double it)and I am suprised that in his research he did not come across the Court Costs Office, which is already doing a very good job of limiting the amount of recoverable costs, including, adjudicating on the level of success fee and the cost of ATE premiums.
Incidentally, in the event that a Claimant is unsuccessful then that ATE premium will also pay a successful Defendant's costs. In the absence of this they would have a rather more difficult time obtaining their costs from an impercunious litigant.
Finally, while there is no financial risk to the injured person there will be a considerable risk to the insurer who is providing that ATE policy that they will be footing the Defendant's costs. Therfore where a case is less likely than not to be successful that ATE insurer will pull the plug.
This old but relevant article might be of interest to those who want to read a little further than the headlines.
http://johannhari.com/2005/06/01/compensation-culture-i-wish
George Laird
August 27th, 2010 4:42pm Report this commentDear justathought
I am in social housing, which would be better termed ‘state slums’.
28 months to repair a water leak coming through my living room.
Reading your piece, it reeks of selfishness and makes you come across as a bore.
“I am all in favor of abolishing legal aid but for a different reason to those already given.In my experience a is that a great deal of anti-social behavior is facilitated by the present system”.
You think anti social behaviour is a direct result of access to legal aid?
No, it is a result of knowing we live in a corrupt and immoral country.
“Many housing disputes are now being 'resolved' through the legal aid system for which it was never intended”.
Who allowed this?
It wasn’t the “miscreants” but well educated people in power, the establishment.
“For example social housing tenants on benefits know that if they misbehave and a repossession order is instigated against them then they automatically are eligible for legal aid”.
What about those subject to discrimination?
Should those who are discriminated not be allowed to get justice?
This is would be the result of your idea if it found favour.
“The taxpayer pays three times over, first in housing benefit, then in council tax bring a case against the offenders and lastly by the state legal aid in defending the possession order (exchange this for any other anti-social behavior order)”.
Wow, you really are a wonder; allegation equals guilt in your mind.
“The social housing and many other miscreants are a wiley lot and once they know that they cannot receive legal aid then they will moderate their behavior or face the consequences”.
So, poor people in social housing are miscreants?
“That way law abiding citizens who work will not feel at a disadvantage over the feckless legally aided”.
Can you be a law abiding citizen and stay in social housing?
It would be good to see you walking in other people’s shoes; then perhaps you would think more before putting finger to keyboard writing drivel.
Legal aid isn't targeted on the basis of merit rather it is directed towards minorities while other people struggle to get justice.
And usually don't.
Yours sincerely
George Laird
The Campaign for Human Rights at Glasgow University
merlinthepig
August 27th, 2010 5:48pm Report this commentHaving had the advantage, if one can put it that way, of acting for the legally aided (whether the apparently deserving or undeserving type), I believe the problem is not the availability of civil legal aid per se but its availability for high cost human rights cases that seek rulings, all the way up to Europe, on perceived and non-priority entitlements (school uniform of choice, all the home comforts in prison)in preference to the more mundane but essential things that should be fought over (good healthcare and housing). Those of us who suffered the Legal Services Commission's gradual whittling away of the incentive to do such cases were always mindful of the fact that Cherie Blair and Matrix Chambers (set up predominantly to specialise in human rights cases)seemed to have plenty of work. It was after all Cherie Blair who, introducing the new Lgal Services Commission said "Just Ask!" But who received?
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