Law Society warns of problems in 'no win, no fee' arrangement
The Law Society has warned of the pitfalls of introducing a 'no win, no fee' arrangement for legal services. The idea is being discussed today by a Law Reform Commission panel.
In its report to solicitors, the Law Society's working party on conditional and contingency fees drew on the experience of England and Wales to identify problems that would require solving before the system could be introduced here.
A conditional fee agreement is a 'no win, no fee' arrangement by which a lawyer who wins a client's civil case is paid a pre-agreed percentage bonus over and above the normal fee.
The report suggests that allowing lawyers to charge on a conditional basis would improve access to justice for those people whose income renders them ineligible for legal aid but who are not wealthy enough to shoulder the high cost of litigation for civil claims.
The report warns of the need for the appellant to take out after-the-event insurance, which covers the costs of the other side if the appellant loses. Such insurance, which is unavailable in Hong Kong, caused major complications for insurers in England and Wales, the report says.
Insurance premiums in Hong Kong might be prohibitively high because of the cost of litigation here, it says. The report goes on to say that, despite its problems, the system had generally been welcomed in England and Wales, where it was seen as offering wider access to justice, making lawyers more committed and creating more work for them.
Law Society vice-president Michael Lintern-Smith said the advantages of a conditional fee system for smaller firms should not be exaggerated. With the cost of litigation high and the damages awarded in Hong Kong relatively low, this could make the system viable only for larger firms.
'This seems to work in jurisdictions like the US where there are several million lawyers and huge firms with sufficient wealth to take on this burden, but in Hong Kong we have only 5,000 solicitors and most of them are organised in small firms,' he said.
'Very few of them could finance an action all the way to trial. Who would pay for evidence-gathering, forensic research or analysis and pay doctors and banks and other witnesses? Who will pay court fees?'
The Law Society's paper is to be circulated, and a forum organised to seek members' views on allowing the system in Hong Kong, before the society makes formal recommendations on the matter.
