No win, no fee regime proposed for civil action

| 05/01/2016 | 18 Comments

Cayman News Service(CNS): The Law Reform Commission has released a draft bill and a discussion paper for public consultation on conditional and contingency fee agreements between clients and lawyers in civil action cases, paving the way for a no win, no fee regime. The review by the commission was suggested by the attorney general based on the direction from the Court of Appeal over a 2012 damages case in which a contingency fee had been organised.

Although conditional agreements are not uncommon between parties in the Cayman Islands, the law that deals with lawyers’ fees doesn’t actually provide for such arrangements. The proposed new law would replace the existing legislation on torts and offences of maintenance and champerty.

The Law Reform Commission is seeking public input on the documents posted below in order to ensure that consideration is given to the issue which facilitates access to justice to those who have a claim but not the financial means without creating a compensation culture or ambulance chasing lawyers.

A conditional fee agreement is one where the lawyer accepts a basic fee for action with an agreed uplift if it is successful. A contingency fee agreement is one in which the lawyer is paid nothing if the action is unsuccessful but he retains an agreed percentage of the client’s damages if the action is successful to compensate for the risks of not being paid in the event of failure.

“Both types of agreements have been viewed by proponents over the years as fundamental routes to access justice by lower income persons. The agreements are used in civil cases and can be of particular value where a person does not qualify to obtain legal aid but also cannot afford to pay a retainer,” the commissioners stated. “However, opponents to the use of such agreements view them as incentive to excessive litigation and argue that they promote a compensation culture.”

The commissioners said the legislation would not relate to criminal or family law cases but would be aimed mostly at civil disputes and damage cases. The discussion paper examines the current law in the Cayman Islands as well as the history, advantages, disadvantages and the social impact of such types of agreements in jurisdictions such as the UK, Australia, Canada and the US.

The commissioners are also looking at facilitating third party funding, where another person covers the cost of the case but takes a cut of any subsequent damages awarded to a successful litigant. In addition, they want interested parties to submit comments and suggestions on how clients can be protected under the new law, if the courts should have oversight of fee arrangements, how ‘success’ fees should be regulated and other issues that could impact the overreaching goal, which is to make it easier for those without the means to access the justice system when they have been genuinely aggrieved.

A review of litigation funding in the Cayman Islands – Conditional and Contingency fee agreements, discussion paper December 2015

The Private Funding of Legal Services Bill, published December 2015

The Discussion Paper and Bill will be published on www.gov.ky as well as on www.lawreformcommission.gov.ky (or www.lrc.gov.ky). Submissions should be made no later than 31 March, 2016 and should be posted to the Director, Law Reform Commission, P.O. Box 1999 KY1-1104, delivered by hand to the offices of the Commission which are located in the Legal Department, Fourth Floor, Government Administration Building or sent by e-mail to Cheryl.Neblett@gov.ky.

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Comments (18)

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  1. Anonymous says:

    Being against this is fine and dandy for the people that have money but think of the people that are poor that have been done wrong but have no recourse. I know many examples of where a business should have been sued but instead they gave a job to a family member or the person that they botched up.

  2. Anonymous says:

    If someone cannot afford a lawyer, how can they afford to pay cost to the other side if they lose?

    • Fred the Piemaker says:

      An excellent point. At the moment if a plaintiff brings a claim that they are unable to pay. and their attorneys knew that going in, they can be on the hook for the defence costs if they lose! Agreeing to no fee is a separate issue. There is a related point, which is what is the level of costs the defendant needs to pay if they loose in addition to the damages if they lose. Do they pay the normal costs, or the higher costs because it was a success fee arrangement?

      • Anonymous says:

        There is no need for reform to protect for this. ATE insurance would cover this and it is legal now. For smaller claims in a small market, there might be a case for a limited upper end recovery on a contingency basis of say $10,000 or $20,000 dollars to allow smaller claims to proceed when ATE is impractical.

  3. Anonymous says:

    Most Cayman firms are not big enough to engage in no win no fee and the market is too small for what is a volume business. This Bill if enacted would shift a sizeable amount of the work on bigger cases to New York or London.

  4. Anonymous says:

    At least limit these silly ambulance chasing deals to personal injury claims at first.

  5. Sharkey says:

    I think that people should not support this bill , even dough a owner might be negligent in keeping his/her property safe , this is where property public liability insurance should be mandatory . Let the Insurance company and the Lawyers deal with it , because I can see every little thing ending up in court with this Legislation. Lawyers sue for big money and business would have to close down, then we would end up with a lot of Law firms and no other business.

  6. Anonymous says:

    The Commission seriously needs to stop putting so much reliance on Canadian and US law. It is become beyond a joke and very dangerous.

    • Anonymous says:

      The reports sometimes now read like they were outsourced to a second year law student in Ontario as a summer project and that student copied half of it from a law review article from the States.

      • Anonymous says:

        Reliance on Canadian and US law is very much welcome. For start we have many Canadians and American here but the RCIPS and their diversity programme doesn’t take note (Hmmmm..colonialist)?. Aside from that. our “welfare state” is far more similar to the US than say England. If you are hurt and need compensation you can’t go to the job centre and claim disability sorry mate the NAU is closed 3 of 5 days a week to slow the flow. No welfare here so let the poor injured people claim and win the big bucks and let us all pay for it via insurance since the government won’t do the right thing and step in with income tax so that a fair system “to the poor” can be had.

        Or you can complain about crime …and the excellent job our UK based policing is doing..

        I think the law commission is doing a fine job. aus

  7. Anonymous says:

    probably the worst thing ever cayman needed right now……

  8. Anonymous says:

    just wait for the tsunami of nonsense claims….and settlements…..

  9. Anonymous says:

    one step forward…two steps backward for cayman…..

  10. Anonymous says:

    jesus…here come the compo culture cayman has been trying to avoid…..
    last person to leave..please turn out the lights….

  11. Anonymous says:

    Yawn.

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