Personal Injury
Proposal to scrap advertising by 'no win no fee' merchants
18th August - If Lord Young of Graffham wants no more cringeworthy sleek adverts and perhaps even a ban on referral fees. If he gets his way the repercussions could be huge..
Lord Young of Graffham – commissioned by David Cameron to investigate health and safety laws and the compensation culture may demand an end of the business model whereby claims are harvested through advertising by 'no win no fee' farmers. These companies are usually claims management companies but can be law firms. The industry is worth £400m.
The dichotomy is as follows, these are unnecessary costs that inflate the value of lawyers' fees and ultimately drive up insurance premiums, as it is liability insurers who pay them. From another, they are marketing costs that lawyers would incur anyway.
Young's anti-CMC rhetoric has been strong and he could also attempt to reinstate the ban on these so-called referral fees, which was lifted by the Law Society in 2004. In doing so, he would echo Lord Justice Jackson's recommendations earlier this year on reducing the cost of litigation (a report Young has publicly supported). But announcing the way forward on Jackson last month, the justice minister Jonathan Djanogly specifically excluded a decision on referral fees pending advice from the Legal Services Board (LSB), the super-regulator which is currently examining the issue.
The Guardian reports today that in papers released under the Freedom of Information Act released today, the LSB's view is tha the evidence does not provide a case to ban but this is subject to a review next month.
For more on referral fees and the LSB:
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