Costs
The Ministry of Justice (MoJ) is clamping down on “contingency fee agreements”, where “no win no fee” lawyers extract a large proportion of their client’s damages for excessive legal fees.
The damages-based arrangements are most common in employment tribunal proceedings and are largely unregulated. The MoJ intends to use the Coroners and Justice Bill, currently before Parliament, to introduce proper regulation to protect against unfair or unreasonable agreements.
The new regulations are likely to include: a cap on the percentage of damages that can be recovered by the legal representative; a requirement that legal representatives provide claimants with clear and transparent information on total costs; a requirement that legal representatives clarify the deductions made from the claimant’s award which are to go to the representative as their fee for taking on the case; and a requirement that they provide explicit information on alternative methods of funding.
The justice secretary, Jack Straw, says: “These arrangements—unlike, for example, conditional fee agreements—have been without statutory regulation because of an anomalous and long standing interpretation of the law which has classified proceedings in employment tribunals as ‘non-contentious’.”
The department is due to publish a consultation paper with more details.
(For more on costs see this issue pp 737–748.)
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