Are 'no win, no fee' offers a legal pest or the last line of defence?


While solicitors who take 'no foal, no fee' cases offer a cheap option to clients wishing to take a personal injury action, critics, including IBEC, argue that the practice can make such cases too easy to pursue and can result in ill-founded or fraudulent cases being raised. Una McCaffrey reports.

For the uninitiated, searching for a solicitor in the Golden Pages can be something of a shock. Rather than dry lists of grave-sounding company names, the consumer is greeted with advertisements that would seem more in tune with double-glazing sales than legal services.

"It costs nothing to talk to us"; "free home visit"; and "first consultation free" are typical pitches.

Upon closer examination, it soon becomes obvious that most of the more strident advertisements relate only to one aspect of the law: personal injury. It is then that the realisation strikes: without warning, you have stumbled upon the world of the "no foal, no fee" solicitor.

The basic premise of this approach is that a consumer pursuing a personal injuries action (the plaintiff) pays no legal fees unless their case is successful. Should they "win", the plaintiff will be presented with a bill from their legal representative and, flush with the proceeds of their award, will presumably be happy to pay.

The flip side of this is that if the action is lost, no bill will appear. In reality, however, losing can be a more expensive business.

"No foal, no fee" covers only the plaintiff's costs, not those of the other party. Should the plaintiff lose the case, they may well face a bill from the opposing party for their legal costs.

In response, an increasing number of no-win, no-fee solicitors will insure clients against losing the case. Thus, "no win, no fee" can become "no win, no fee, except the cost of insurance".

Even with this added detail, there is no denying that solicitors offering services of this kind do represent a cheap - albeit not risk-free - alternative for consumers who wish to take a personal injuries action to the courts. It was on this basis that many of the Army deafness claims of the past five years were pursued successfully, actions that ended up costing the Department of Defence more than €127 million.

Unsurprisingly, the approach is not universally popular, with insurance companies and other businesses its most vocal critics. The argument against the practice is that it could make personal injury cases too easy to pursue and result in ill-founded or fraudulent cases being raised. It is also claimed that it encourages ever-increasing compensation awards and, therefore, ever-rising costs for the losing side.

IBEC, the employers' representative body, is clearly on this side of the divide, arguing that employers are forced to foot too many compensation bills and that no-win, no-fee legal services have a part to play in this.

"Those types of practices we would see very much as inciting claims," says Mr Brendan Butler, IBEC director of enterprise. Mr Butler describes the Golden Pages type of advertising as "blatant campaigning" and suggests that it leaves the claims process open to abuse.

This baton was taken up by Supermac chief executive Mr Pat McDonagh a few weeks ago, when he circulated a video that clearly showed a fall being faked in the toilets of one of his company's restaurants. The ensuing claim failed because of the video evidence but Mr McDonagh expressed concern that many other false claims were not so easy to disprove.

IBEC has estimated that the cost of personal injury compensation in the Republic last year will be more than €2 billion, a figure that the association says will contribute to a doubling in the cost of employers' liability insurance over a two-year period.

The Government-sponsored Special Working Group on Personal Injury Compensation found last year that the delivery of compensation typically costs between 25 and 40 per cent of the compensation figure.

This translates into expense for the loser and legal fees for lawyers.

Given the amount of money said to be involved, it is easy to see why personal injury claims give rise to such strong feelings: a mere mention of the phrases "compensation culture" or "ambulance-chasing" and the fur begins to fly on both sides.

"There is absolutely no doubt that this type of advertising - the language used and the facilities offered - is a contributory factor to spurious claims," says Mr Butler.

In 1999, IBEC set out a 14-point plan designed to address what it called "genuine cases of personal injury". One point related specifically to the issue of "no-win, no-fee" advertising by personal injury solicitors, and called for legislation to outlaw the practice.

Three years on, the Solicitors (Amendment) Bill, 1998 - drawn up in the wake of the Army deafness claims - is still at committee stage (see separate story), leaving solicitors free to advertise as they please.

IBEC is concerned that the imminent general election could see the Bill fall before being enacted, with Mr Butler describing its provisions as "extremely important".

The Bill is also supported by the Law Society, but director-general Mr Ken Murphy says that this position should not be confused with disapproval of the no-win, no-fee approach in general.

"The Society views this as an access to justice issue and believes that a great many meritorious claims would never be brought to the courts and justice obtained unless this system were in place," says Mr Murphy, who contends that the only alternative is the introduction of a comprehensive civil legal aid system.

As for the notion of spurious claims being encouraged by the practice, Mr Murphy says that no solicitor will take on a case unless he or she believes that it is sound.

"We do believe that many of the lawyers who advertise in the Golden Pages turn away many cases," he says, dismissing any suggestion of a compensation culture as "a tabloid cliché".

Still, the advertising should go, says Mr Murphy, who estimates that the solicitors affected by the 1998 Bill represent just "1 or 2 per cent" of Law Society members.

"We believe that this type of advertising has tended to diminish the esteem in which the profession is held," he says.

One affected member is Mr Peter McDonnell, a Dublin-based solicitor who has practised in the personal injuries area for 22 years. All of Mr McDonnell's work is conducted on a no-win, no-fee basis, including an ongoing suit against a group of tobacco companies in which he represents more than 200 smokers.

What does Mr McDonnell feel about the notion of a "compensation culture" being fostered by practices such as his own?

"It makes me feel hurt and it makes the people I represent feel hurt," he says. "Nobody would want to get injured in order to get compensation."

Mr McDonnell says the insurance companies that oppose his approach to personal injury cases are so outspoken because they "don't want to give any money whatsoever. They're throwing all this muck and I'm sick of it," he says.

"Any people I take on have to convince me that they have a case and I turn away more people than I take on."

Mr McDonnell points out that a medical specialist also has to be convinced that a claim is legitimate before it can be pursued. The fact that more than 90 per cent of personal injury claims are settled before they reach the court should be proof enough that they are genuine, he says.

To argue that practices such as his own encourage false claims is, according to Mr McDonnell, "like saying that umbrellas cause rain".

He also dismisses the notion that compensation awards are rising, saying that the average whiplash award, for example, has remained at about the €9,500 level for the past 10 years.

A very acute whiplash could reach an award as high as €88,000, but only if the patient in question is "seriously affected", says Mr McDonnell, who maintains that "the total number of fraudulent claims in the Republic is a drop in the Atlantic Ocean".

Mr McDonnell, like many personal injury solicitors, argues that he is providing a legal-aid service that should, by rights, be catered for by the Government.

"It is left to us who have no funding to fight the multinationals, who have all the ammunition," he says, drawing heavily on themes of social justice and equality.

However, Mr McDonnell is making a living like everyone else. "We have to win to get paid," he says. "And we have to win more than we lose. Even where liability is difficult, we'll try to get it over the line with contributory negligence."

The consumers on the receiving end of no-win, no-fee legal services do not appear to be its strongest opponents.

Mr Dermot Jewell, chief executive of the Consumers' Association of Ireland, says he has not come across any complaints personally against the practice or related advertising.

The European Consumer Centre, a source of free consumer advice, reports a similar absence of complaint.

Mr Jewell is not a fan of the system, however. He is concerned that some consumers may be persuaded by the no-cost advertising theme to enter into a legal process they might not otherwise choose.

"That attraction may stop them asking the final question that may take them down another road," he says.

In Mr Jewell's view, the no-win, no-fee approach is sure to become more of an issue in coming years.

One proposed initiative that has already entered the argument is the Personal Injuries Assessment Board, whose establishment has been mooted since early 2001 but remains mired in opposition.

The idea, a key recommendation of the Special Working Group on Personal Injury Compensation, is to create a forum outside the courts system where personal injuries compensation would be judged, thus injecting a degree of realism into the amounts awarded.

Groups as diverse as SIPTU and the Bar Council are among the bodies doubting the board's potential and calling for greater consultation on its establishment.

While such delays prevail, the chances of seeing a change to the current system would seem to be slim.