"No win, no fee" agreements, and their effects on public interest litigation, are in focus in the UK as the Government's Bill reforming the process of litigation funding progresses through Parliament.
No win, no fee agreements involve costs being paid by the losing defendant but only if the claimant's claim is successful. As a result of this and as a reward for running the risk of not getting paid, lawyers institute a "success fee." This fee can be an increase of up to 100% on the lawyers' base hourly rates. Lord Justice Jackson in his 2009 report commented that this type of arrangement is "the most bizarre and expensive system that it is possible to devise."
The Law Society of England & Wales's chief executive, Des Hudson is not in favour of the proposals and would like to Government to reconsider some of the proposals. Lord Prescott is in favour of "no win, no fee" agreements and claimed that the Bill's aims "will see the power shift away from the weak and to the strong.....this Bill is nothing about better civil justice, it is about disadvantaging the vulnerable and that's what we should not accept."
Organisations such as Amnesty, Oxfam and Cafod have warned that "not only will the victims find it much tougher to bring human rights abuses cases to court, it will take away one of the deterrents preventing companies from acting inappropriately in the first place."
Meanwhile, Liberal Democrat Lord Thomas of Gresford had put forward the suggestion of a statutory code of conduct in conjunction with the Legal Aid, Sentencing and Punishment of Offenders Bill.
Bulletin readers may recall that a new code of conduct for litigation funders was published in November where compliance will be compulsory for funders who wish to join the Association of Litigation Funders of England and Wales.
Litigation funding expert Keith Levene of Pinsent Masons law firm commented "as the Legal Aid Bill changes the way that litigation is funded, third parties are likely to become increasingly involved in the field of personal litigation rather than its use being limited to more sophisticated corporate entities."
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In Australia a new report by Michael Legg of University of New South Wales, sponsored by the US Chamber Institute for Legal Reform, examines how litigation funding creates conflicts of interests "where businesses invest in high-stakes legal disputes, sharing the risks and potential rewards." The conflict usually presents itself "in the context of the lawyer's role in the litigation funding arrangement."
An excerpt from the report says "anecdotal evidence suggests Australian lawyers recognise the conflict. Some have advised clients to seek independent legal advice on the terms of the funding agreement."