Plans to end Britain’s “compensation culture” and cut the amount solicitors can receive from “no win, no fee” cases could cost hundreds of jobs in the West Midlands, according to a Birmingham law firm.
DBS Law Ltd, based in Broad Street, claims that the industry could see its income slashed by 25 per cent.
And this would lead to job losses in the region’s legal industry – which provides employment for around 4,000 lawyers, but employs many more in administrative roles.
The firm’s director, Davy Bal, has written to MPs urging them to pressure the Government to change its mind.
Ministers plan to change the law so that solicitors in “no win, no fee” cases are paid, when they win a case, from the damages received by the claimant.
At the moment, they are paid from a “success fee” charged to the defendant. But Ministers believe the current system provides claimants and their solicitors with no incentive to keep costs down.
Solicitors have no motivation to offer a good deal to clients who want to sue because the client is guaranteed never to have to pay anything.
A report published by the Labour government last year warned that the result was a huge rises in civil litigation costs in England and Wales.
The study, by Lord Justice Jackson, warned that lawyers were sometimes receiving fees which were ten times higher than the damages received by their clients.
And legal fees are costing the NHS almost half a billion pounds each year. According to the Ministry of Justice, the health service paid out £312 million in damages but £456 million in legal costs in 2008-09.
However, critics of the changes argue that they will make justice unaffordable for some people, particularly in cases where there is a risk that the cost of solicitors will be higher than the damages received.
The parents of the murdered schoolgirl Milly Dowler, who sued the News of the World, and Chris Jefferies, the former landlord of Joanna Yeates, who sued a number of newspapers for libel, have warned that plans to reform no win-no fee agreements will prevent people of “ordinary means” from obtaining justice or defending themselves in court.
In a letter to Birmingham MPs, Mr Bal wrote: “Many of your constituents use this system to obtain their rights. Many others who work in the vibrant legal services sector in our city rely on the system for their livelihoods.
"The changes proposed in the Bill will make access to justice the preserve of the rich which excludes most of your constituents.
“Well-paid jobs with prospects are at a premium in Birmingham and this legislation will only make this situation much worse with job losses being guaranteed in our industry.”
DBS Law spokesman Richard O’Brien said: “No win, no fee has put pressure on employers to make workplaces safe and on councils to improve road safety.
"But reducing access to justice will lead to local authorities cutting corners. It will mean more potholes in the road.”
A Ministry of Justice spokesman: “There are many deserving cases brought before the courts. But we have to stop the abuse of the system by others pursing excessive, costly and unnecessary cases.
"Under the current arrangements, innocent defendants can face enormous costs, which can discourage them from fighting cases. This simply isn’t fair.’’