Claimants left high and dry

In 1996, the Lord Chancellor described the English legal aid system as a “highly successful public social service”. Large numbers of people were helped to bring claims that resulted in a substantial recovery of damages and they could do so without having to carry the burden of financing that litigation.

However, every sensible lawyer agreed that the legal aid budget could not continue to be demand-led and escalate ad infinitum.

The Personal Injury Bar Association has always supported the Government's aim of ensuring that a wide range of legal services is available from competent providers delivering value for money. It has supported the Government's aim of tightening the merits test before legal aid is granted.

But the service is now to be fully privatised. The Government intends to give crime and family litigation first call on the budget and to finance the rest with what is left over. Legal aid for personal injuries will effectively be abolished and replaced by conditional fee agreements (CFAs). But there is every chance that this will obviate rather than facilitate access to justice. If a case has to be funded as it progresses, who will pay for those disbursements?

The Policy Studies Institute published a report on CFAs in September 1997. In 75 per cent of the cases surveyed, disbursements were met by the client. Many personal injury lawyers do not agree with a system that requires the poor to fund disbursements. It will mean that claimants who have genuine claims but who cannot afford the disbursements will not even be able to get their cases off the ground.

Also, because the system aims to deliver full compensation as opposed to partial or no compensation, there is a real danger that seriously injured claimants may end up dependent upon the state for their support, because they lose cases which would formerly have awarded them partial damages or because their cases are borderline and practitioners are reluctant to take them on in the first place.

If all the lawyers involved in a claimant's case are “on risk”, there is also a real danger that if a defendant makes an offer that reflects a proportion of the true value of the case, the lawyers may accept it to secure their costs. That cannot be in the interests of the consumer.

At least if counsel were treated as a disbursement (as was recommended by KPMG in April 1998) there is then a detached assessment mechanism available for each case. Many after-the-event insurers appreciate this and are starting to offer policies that treat counsel as a disbursement.

Also, after the tobacco litigation, how many firms will be willing to take on large-scale litigation on a CFA basis? Few will have the financial resources to fund it. Counsel and solicitors are likely to want to process only those claims they think will result in a swift settlement and moderate expenditure. Outside the bigger cities, where will a claimant find a lawyer willing to take on a difficult case against a rich defendant?

Against this background many will look fondly back to the days when legal aid was available for personal injury.

Today (Monday) Bob Marshall Andrews MP will table an amendment to the Access to Justice Bill to preserve legal aid for child patients and those on income support. If the Government backed this amendment, at least something would be salvaged from this sorry mess. But frankly, there isn't much likelihood of that.

Matthias Kelly QC, a specialist in personal injury litigation, is a tenant at Old Square Chambers.

Personal injury and legal aid

In 1996/97 the Legal Aid Board assisted 76,670 injured claimants to bring claims in England and Wales. The total budget for all types of legal aid was £1,477m. The net cost to the Exchequer of assisting almost 77,000 people in bringing claims for personal injuries was £34m. For that, £502m was recovered in damages. The cost to public funds was low because personal injury litigation has a high success rate. As the Lord Chancellor himself pointed out before assuming office, judgments in favour of legally aided PI claimants were 81 per cent. If settlements in favour are included, the figure rises to 91 per cent. Research suggests about half of PI litigation in the UK during this period was funded by legal aid.