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Law Society attacks limit on contingency fees

7 April 2010

The president of the Law Society, Bob Heslett, has attacked the limit of 35 per cent on the proportion of damages solicitors can take as contingency fees in employment tribunal cases.

The change was implemented yesterday under the Damages-Based Agreements Regulations 2010.

“This is a cavalier move by the government which is not only damaging to the citizen but wrong in principle,” Heslett said.

“Professor Moorhead, on whose research the government relied, has written to Parliament to indicate that his research should not be taken as providing evidence to support this limitation.

“It is outrageous that government should seek to twist his research in order to use it as a basis for these regulations.”

In his submission to the Lords merits committee earlier this year, Professor Moorhead said: “The research base did not support the view that contingency fees generally led to overcharging of clients, indeed the evidence suggested that contingency fees were generally a better deal for clients than paying on an hourly basis.

“It is important to acknowledge that the research base is limited, but it is the best information we have. On this basis, I would question the need for a cap of the kind implemented.”

He said that the likely impact of a cap on contingency fees at 35 per cent inclusive of VAT would be to “reduce the number of more difficult but meritorious cases and therefore, in my opinion, to reduce access to justice for cases that merit support.”

Heslett said he had written to shadow justice secretary Dominic Grieve, calling on him, if a Conservative government was elected, to repeal the measure.

“It is difficult to see anyone other than trade unions benefiting from these hasty changes,” Heslett said.

“Experience in respect of equal pay deals suggests that unions may not be in the best position to deliver appropriate results for their clients and those wishing to challenge such deals may well find it impossible to do so.”

The regulations were approved by the Commons delegated legislation committee last week by a majority of 8:6.

Henry Bellingham, the shadow justice minister, said the government argued that clients had been let down and cases settled early because of the desire of lawyers to have the contingency fee.

“Although there are problems, surely the way forward is for the Ministry of Justice to work with the Solicitors Regulation Authority and other bodies to seek a regulatory solution,” Bellingham said.

“There is a regulatory solution out there, but the government has not grasped it.”

Dean Morris, principal of Morris Legal in Solihull, which specialises in employment law, said the result of the regulations would be that no lawyer would touch the more complicated discrimination cases “with a barge pole.”

He said it was ironic that, on the same day as the regulations were implemented, the Equality Bill became law.

“The government has gone to great lengths to introduce the Equality Bill with all these lovely rights, but takes away the ability of people to be represented,” he said.

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Risk & Compliance Company, Consumer, and Contract Trade Termination Discrimination