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THE WEEK AHEAD: WILL THE HOUSE OF LORDS VOTE FOR OR AGAINST THE STRIPPING OF RECOVERABILITY OF ATE PREMIUMS AND CFA SUCCESS FEES?

Next week, the House of Lords is due to start voting on the parts of the Legal Aid, Sentencing and Punishment of Offenders Bill (‘LASPO’) which relate to the recoverability of After the Event (‘ATE’) insurance premiums and Conditional Fee Arrangement (‘CFA’) success fees. But what will the outcome be?

The Government has already been defeated several times this week regarding amendments to the bill, including on the issue of whether legal aid should remain available in relation to obtaining expert reports in clinical negligence actions.

On Wednesday night, the Lords were again defeated; this time by 237 votes to 198 in favour of preserving legal aid for appeals against welfare benefit decisions (an outcome which the Liberal Democrat Justice Minister Lord McNally warned would “tear out the heart of the rationale of the bill”).

CHARITIES WARN OF IMPACT OF LASPO

Various commentaries have been given as to how the Lords should vote next week including views expressed by aid charities such as Oxfam, Amnesty International, CAFOD and others.

Amnesty International has written to every member of the House of Lords warning them that the amendments regarding stripping recoverability of ATE insurance premiums and CFA success fees contained within the LASPO bill will prevent access to justice for victims of human rights abuse.

Ultimately, the result of stripping recoverability of ATE premiums and CFA uplifts will be that clients will have to fund these liabilities out of the damages they recover. This is something which Amnesty International and many others believe will prevent certain cases being pursued at all, preventing access to justice once again.

“Taken together, these costs are likely to wipe out potential damages awarded and will make the claim financially unviable at the outset” says Amnesty International.

To demonstrate this point further to the Lords, Amnesty have confirmed that the 69,000 victims of two massive oil spills in Bodo, Nigeria would, in all likelihood, have been financially unable to pursue their claim against corporate giant Shell without there being recoverability of ATE insurance premiums and CFA success fees.

HUMAN RIGHTS ISSUE IS ONE OF MANY

Leaving aside the intention to deprive human rights abuse victims of access to justice, those who will suffer as a result of the proposed abolition of recoverability also include small to medium sized business owners who seem to have been fairly overlooked throughout the entire debate.

If a company cannot afford to pursue a piece of litigation without the benefit of CFAs and/or ATE insurance, but cannot afford to eliminate its ultimate recovery either, the litigation becomes completely uneconomical to pursue from the outset.

The LASPO bill apparently aims to save the Ministry of Justice £350m a year but unfortunately, it seems that many will suffer as a result, except of course those whose pockets are deep enough that they can easily afford to defend or pursue legal action without external assistance.Kate Allen, director of Amnesty International UK, says:

“It is outrageous that a government which professes to want to promote ‘responsible capitalism’ is giving carte blanche to powerful goliath companies…with no remedy for their victims.

Only time will tell whether the Lords have taken these facts on board in their voting decisions so watch this space.