The way "no win, no fee" deals are regulated has failed to protect customers from unscrupulous solicitors, the Government said yesterday.
A simpler new regime was being created to make the agreements easier to understand, and allow consumers to " shop around" for the best deals.
A report from the Department for Constitutional Affairs said: "The current regulations have not been a force in protecting consumers from unregulated providers and have done little to provide protection from the minority of solicitors not living up to their professional standards."
The existing set-up was actually "unworkable" in practice, it added.
The regime - which comes into effect on November 1 - will require solicitors to ensure clients are fully informed about the strength of their case and prospects of success in "clear, simple terms".
A DCA spokeswoman said: "This will help to ensure that only wellfounded claims proceed, and benefit both claimants and defendants, who will be spared the stress of avoidable court hearings."
No win, no fee deals - officially called conditional fee agreements - mean a solicitor acting for a claimant will only be paid if he or she wins the case.
The solicitor will also be entitled to an extra fee - known as a success fee - all to be paid by the losing party.
If the claim fails, however, the claimant's solicitor is not paid and the claimant will be liable for the defendant's costs.
The claimant can take out " after the event" insurance (ATE) to help pay the costs should this happen, but this is expensive and not compulsory.
If the claimant cannot afford to pay after losing, the party which had the case brought against them will often be left with a large legal bill.
DCA Minister Baroness Ashton of Upholland said: "Conditional fee agreements play a valuable role in helping people with valid claims obtain access to justice.
"For many consumers and businesses this provides the only means of obtaining appropriate redress.
"A regime that is complex and opaque puts the consumer at a disadvantage."
She added: "Revoking the existing regulations will help make agreements a simpler product and in particular will help consumers to better understand the agreements they enter into and the risks they could face in contemplating litigation.