Conditional fee insurance is not a rip off
24 February 1998
Far from being a genuine attempt to promote access to justice, Anthony Barton believes that lawyers' support for legal aid constitutes little more than a thinly-veiled vested interest>
Not long ago the Bar Council reportedly warned that the introduction of conditional fees to replace the civil legal aid would lead to the public being "ripped off" by lawyers because of a conflict of interest in relation to the success fee.
If lawyers have so little respect for their own, can they really expect any more from the public? The success fee can be assessed by the court to prevent "ripping off". It is a legal requirement that the client is informed about the availability of taxation. And what of the conflict of interest that confronts the applicant's lawyers which lies at the core of civil legal aid?
The apologists of legal aid refuse to address two fundamental weaknesses. First, the Legal Aid Board (LAB) generally relies on the advice of the applicant's lawyers in deciding whether to fund the claim. Such advice is not independent as the lawyers have a direct financial interest in advancing the claim. They are paid regardless of the outcome. This is reflected in a success rate of only 17 per cent for legally-aided medical negligence claims. Second, it is inherently unfair that the successful unassisted defendant is generally unable to recover to legal costs. The risks are thus tilted in favour of the plaintiff who can only win against the defendant who can only lose.
This lack of mutuality promotes what has been described in Parliament as legal aid "blackmail", where claims are settled for commercial reasons unrelated to their merits.
Legal aid lawyers are resorting to arguments based on the emotive subject of brain-damaged children. It is widely accepted that, in about 85 per cent of cases, the cause of brain damage is not related to a birth event. The Court of Appeal has observed that the fact of brain damage was "no evidence of negligence on the part of the doctors and nurses attending the birth" (Whitehouse v Jordan).
Parliament has provided that a person shall not be granted legal aid unless s/he satisfies the LAB that s/he has reasonable grounds. However, many plaintiff lawyers assert that investigation is essential in every case of brain damage and that there is a right to legal aid. It is difficult to see the legal basis for such a "right to legal aid". In most cases the only possible beneficiaries of legal aid are lawyers and experts. The usually blameless health service is unable to recover its legal costs and has to divert funds intended for patient care to lawyers' pockets. It is the vulnerable that suffer.
There has to be a system of medical accountability and compensation. There must be access to justice. However, legal aid fails to achieve these purposes. It impoverishes the health service. It encourages lawyers to speculate with public money to such little benefit for claimants, and with little regard for the merits of the claim or the quality of representation.
The Lord Chancellor's proposals on conditional fees are, therefore, to be welcomed. They envisage an identity of interest between the claimant, his lawyer, the after-the-event insurer, and the insurance assessor. There are inbuilt incentives to avoid unnecessary litigation. There are commercial incentives to assess cases properly. The conflicts (and lack of identity) of interest that occur in civil legal aid are removed.
The conditional fee system supported by after-the-event insurance works well in personal injury litigation. But, medical negligence presents special problems: the preliminary investigation and the insurance premium can be expensive. The question is whether conditional fees work in medical negligence litigation. The indications are that they do. Many victims of medical negligence have received compensation that they would not otherwise have received. The system is self-financing. The cost of insurance premiums has fallen after two years of successful experience.
However, the cost of investigation and the insurance premium can limit access to justice. State support must be provided in cases of hardship.
Despite the low success rate in medical litigation, insurers will provide cover for a premium costing only a fraction of the value of the indemnity. This is value for money. Insurers appear to be more accurate than lawyers in accessing claims. The Government should recognise this by funding the insurance premium instead of lawyers in cases of hardship.
In next few months the Government will be consulting on the future of legal aid and conditional fees. It remains to be seen if lawyers will be parading the tired old arguments that barely conceal their vested interests or whether there will be a genuine attempt to provide affordable access to justice for all.
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