Drivers will pay for 'no win, no fee' reforms, say lawyers

  • Law Society blasts plans to reform 'no win, no fee' contracts
  • Motorists will be the victims of 'reforms' say Society 
  • Jack Straw calls for referral fees ban at Committee hearing

The Law Society says consumers will be the primary losers and insurance companies will be the winners under plans to reform 'no-win no fee' contracts. 

The body that represents UK lawyers wants the government to ditch planned reforms designed to stamp out the so-called 'compensation culture' in Britain.

On Tuesday the government's Transport Select Committee heard submissions from a number of leading insurance industry professionals as well as MP Jack Straw who is calling for major reforms in the accident management industry that would result in a ban on referral fees.

Earlier this year Parkers carried out an investigation in rising insurance costs and revealed that referral fees - where police, health professionals and other motoring related organisations were illegally passing on details of accident victims to personal injury lawyers in exchange for cash payments - were hugely responsible for the hike in premiums.

Mr Straw believes that the reforms will help to stamp out this practice.

However, the Law Society is taking a very dim view of the proposals, claiming changes to the 'no win, no fee' arrangements will effectively remove access to justice for millions of middle income, middle England families. 

The reforms, backed by Justice Minister Jonathan Djanogly, will make no win, no fee conditional fee arrangements much more difficult for ordinary people to use, according to The Law Society.

The Society believes the insurance industry has created a compensation culture smokescreen to hide the real issue - that of insurers putting the interests of shareholders ahead of those of consumers. 

Law Society chief executive Desmond Hudson said: "The reforms to civil litigation costs and funding which the government is proposing to introduce will further increase the profits of insurance companies to the detriment of consumers. There will be rejoicing in the boardrooms of insurance companies. 

"The government has not only bowed to pressure from insurers and but it has also fallen for the propaganda about the so called 'compensation culture'. This is something for which no credible evidence exists.”

Over the past year insurance premiums rose by around 40%. 

According to the Association of British Insurers (ABI), in 2010 insurers received £46.4 billion in premiums but only paid out £30.8billion in claims. 

Ken Oliphant, head of  the Institute for European Tort Law of the Austrian Academy of Sciences, told The Guardian: “Insurers around the world are trying to put pressure on governments to save on liability costs. You have to understand that legal aid was cut and no win no fee arrangements were meant to replace them, to allow people access to justice.

“If you remove that right then you will not allow ordinary people to have access to justice. If they have to pay for legal costs out of damages it may not be worth going to court

Law Society says consumers will be the primary losers and insurance companies will be the winners under plans to reform 'no-win no fee' contracts. 

The body that represents UK lawyers wants the government to ditch planned reforms designed to stamp out the so-called 'compensation culture' in Britain.

On Tuesday the government's Transport Select Committee heard submissions from a number of leading insurance industry professionals as well as MP Jack Straw who is calling for major reforms in the accident management industry that would result in a ban on referral fees.

Earlier this year Parkers carried out an investigation in rising insurance costs and revealed that referral fees - where police, health professionals and other motoring related organisations were illegally passing on details of accident victims to personal injury lawyers in exchange for cash payments - were hugely responsible for the hike in premiums.

Mr Straw believes that the reforms will help to stamp out this practice.

However, the Law Society is taking a very dim view of the proposals, claiming changes to the 'no win, no fee' arrangements will effectively remove access to justice for millions of middle income, middle England families. 

The reforms, backed by Justice Minister Jonathan Djanogly, will make no win, no fee conditional fee arrangements much more difficult for ordinary people to use, according to The Law Society.

The Society believes the insurance industry has created a compensation culture smokescreen to hide the real issue - that of insurers putting the interests of shareholders ahead of those of consumers. 

Law Society chief executive Desmond Hudson said: "The reforms to civil litigation costs and funding which the government is proposing to introduce will further increase the profits of insurance companies to the detriment of consumers. There will be rejoicing in the boardrooms of insurance companies. 

"The government has not only bowed to pressure from insurers and but it has also fallen for the propaganda about the so called 'compensation culture'. This is something for which no credible evidence exists.”

Over the past year insurance premiums rose by around 40%. 

According to the Association of British Insurers (ABI), in 2010 insurers received £46.4 billion in premiums but only paid out £30.8billion in claims. 

Ken Oliphant, head of  the Institute for European Tort Law of the Austrian Academy of Sciences, told The Guardian: “Insurers around the world are trying to put pressure on governments to save on liability costs. You have to understand that legal aid was cut and no win no fee arrangements were meant to replace them, to allow people access to justice.

“If you remove that right then you will not allow ordinary people to have access to justice. If they have to pay for legal costs out of damages it may not be worth going to court."