Blog: Justice secretary Ken Clarke has announced his plans to improve access to justice by implementing reforms of the Conditional Fee Agreement (CFA) or ‘no-win, no-fee’ legal arrangements, in a move that has been cautiously welcomed by MPs sitting on either side of the Commons, writes Richard Craig.

This move has been afoot for a long time: the area of personal injury compensation is never far from the political agenda and former government advisor Lord Young’s white paper Common Sense, Common Safety got the reform ball rolling in earnest last September.

The issue for the government is that of legal fees spiralling, in Mr Clarke’s words, ‘out of all proportion’. He is concerned that ‘our justice system has increasingly become closed to vast rafts of the ordinary public’ and that the increases in costs have led to losing defendants being saddled with disproportionately high costs.

He claims to wish to streamline the system to make it more accessible to everyone, more efficient and more effective, motives which, in the words of his opposite number Sadiq Kahn, are ‘difficult to disagree with’.

In the case of patients disabled by their injuries to the extent that specialist care and equipment is a necessity, the government has commendably taken the decision to not apply the new rules to special damages, which would be paid by the defendant to fund the cost of that treatment.

However, they will apply to general damages, and therein lies the problem.

Currently, personal injury lawyers hired by claimants recover their costs from the defendant if the defendant loses the case. But Mr Clarke has instigated changes to the CFA that will see claimants being obliged to pay their own solicitor their success fee, capped at 25% of the total compensation figure.

The problem with this is that, in seeking to discourage potential claimants from pursuing frivolous or precarious claims, Mr Clarke has also cast a sweeping net over those who do have a genuine case. The proposed increase in compensation sums is set to increase by 10% to offset the deficit that claimants may now face.

Let us take a typical, very basic example:

Under the current system, Mr S is awarded £2000 after he is injured in an accident at work. Under the new rules, he would be awarded £2200 but will then forfeit £550 of that to pay his solicitor’s success fee, leaving him with £1650. These low-value injury claims make up the vast majority of cases: the typical value of a UK compensation claim comes in at around £2500.

This issue was raised in the Commons by Dwyfor Meirionnydd MP Elfyn Llwyd. He said: ‘Evidence from the Access To Justice Action Group provides numerous instances in which poor people will be excluded altogether following the change in the no win, no fee arrangements, and I am desperately worried about that.’

Why is the government so concerned about these alleged rises in costs anyway? In what way do they directly affect the electorate? Most defendants in personal injury cases are insurance companies. So, Mr Kahn asked Mr Clarke, will these changes to the CFA procedures result in what everyone wants: a plunge in the prices paid for insurance premiums?

Mr Clarke said that he ‘hoped’ premiums would decrease in price, adding: that such a fall ‘is in the hands of the insurance industry and the competitive market in which it works.’

This evident reluctance to give a clear answer suggests that the government is hand-in-hand with the insurance industry, listening to their complaints and acting on their behalf to blame personal injury companies for rise in costs.

Mr Clarke says that he is ‘in favour of people who have suffered injury because of the fault or negligence of somebody else receiving proper compensation,’ but it remains to be seen whether his proposals are merely robbing many to feed a few.

Richard Craig is a spokesman for Accident Advice Helpline