No win, no fee – the impact on practitioners

Employment advisers will be interested in new research (1) which examines the impact of "no win, no fee" agreements in employment cases.
 
The researchers interviewed 191 employment practitioners, 164 solicitors and 23 Claims Management Consultants, about their use of "damage-based contingency fees" (DBCF). This is where a lawyer agrees to act on behalf of a client in return for a fee based on a percentage, often between 30% and 40%, of the damages recovered or awarded to a client if they win. Commonly, the lawyer is not paid anything if the client loses.
 
The 170-page report examines the advantages and disadvantages of DBCFs and, in particular, considers the conflicts of interest that can arise between client and adviser under a DBCF. Their findings, some of which are relevant to the debate on fixed fees, include:

• DBCFs appear to be used only by practitioners who represent applicants
• "DBCFs have probably made a modest contribution to increasing access to justice in employment cases ensuring that some applicants have access to advice and representation when they would otherwise not be able to afford it" (p4)
• "Any contribution to access to justice is not uniform: lower value claims and claims with high levels of risk or cost associated with them are less likely to be brought."(p4)
• in deciding whether to offer DBCF, practitioners took into account case type, prospects of success, likely case value, case duration, likelihood of settlement, predicted hearing length, case complexity and client characteristics (p80–90)
• DBCFs appear to encourage earlier settlement of cases (p5) and some respondent representatives take advantage of this (p109)
• within the research sample, "the level of specialist resources devoted to assisting and representing employers is roughly three times of that devoted to employees" (p4)

 
The report authors are currently researching the client viewpoint on these agreements.
 
(1)
Damage-Based Contingency Fees in Employment Cases – A Survey of Practitioners, 2008, Richard Moorhead and Rebecca Cumming, Cardiff University http://www.law.cf.ac.uk/researchpapers/papers/6.pdf