Civil legal aid for compensation schemes should be stopped

26 August 2010

The Adam Smith Institute argues that the current legal aid system in the UK is fundamentally flawed and should be abolished in almost all civil compensation cases.

The rise of ‘no-win, no-fee’ arrangements means civil legal aid is no longer necessary. However current arrangements unduly favour claimants and encourage risk-free speculative legislation.

The ASI report proposes that the level of additional costs recoverable from unsuccessful defendants – specifically those relating to lawyers’ success fees and after the event (ATE) insurance – should be capped to discourage this excessive litigation and its disproportionate costs

Civil legal aid should be abolished for almost all civil compensation cases according to a new report from the Adam Smith Institute released today (Thursday). It argues that Britain’s current legal aid system, the most generous in the world, is fundamentally flawed - it puts claimants in a no-lose and defendants in a no-win situation. With the rise of Conditional Fee Arrangements (CFAs), civil legal aid is no longer necessary.

Crucially, however, the report suggests that current CFAs are subject to the same problems as civil legal aid: the balance of risk in litigation is biased in favour of claimants. The main drivers of this risk imbalance are the claimant’s ‘additional costs’ – specifically lawyers’ success fees and ATE insurance premiums – which are always paid by unsuccessful defendants, but not by unsuccessful claimants.

In the ASI report, ‘Access to Civil Justice: Balancing the risks’, Anthony Barton, a lawyer and medical practitioner, proposes the additional costs borne by unsuccessful defendants should be capped. This would deter claimants from bringing weak cases with no risk to themselves, whilst preserving access to justice in the absence of civil legal aid.

Anthony Barton goes on to criticize Lord Justice Jackson’s Review of Civil Litigation, which proposes that the recoverability of the success fee and ATE insurance should be abolished and one-way cost shifting should be introduced. Barton points out that this cost shifting would mean costs are borne by unsuccessful defendants but not be unsuccessful claimants and would therefore open the floodgates to further risk-free, speculative litigation.

Tom Clougherty, the executive director of the Adam Smith Institute, said: “The current system of civil litigation in the UK is unfairly stacked in favour of claimants. We need to address the risk-free, compensation culture and the excessive costs it brings with it. The reforms we’ve proposed will save the taxpayer money while also ensuring a system of funding access to justice that is simple, robust and fair. It’s a win-win that the government should be tempted to go for.” 

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