Conditional fee agreements and human rights limitations

In the UK, the option of a ‘conditional fee agreement’ was introduced to compensate for a general reduction of legal aid.[1] Under this scheme, a lawyer represents a client upon the basis that, if the case is lost, either no fee or only a reduced fee is payable by the client. These conditional fees are linked to an ‘after-the-event insurance’, which would pay the adversarial party’s costs in the event of losing the case.[2]

A drawback of this system is that the losing parties have to pay considerable compensation for the litigation, as well as the lawyers’ fees and the insurance premium. This has generated criticism of the enforceability of conditional fee agreements and has even been seen as potentially conflicting with human rights.[3] For example, in the recent case of MGNLimited v The United Kingdom the European Court of Human Rights ruled that the conditional fee agreement regime, in which the loser is liable for the success fees of their opponent’s legal costs, breaches the applicant’s right to freedom of expression.[4] It held in particular that ‘the requirement that the applicant pay success fees to the claimant was disproportionate having regard to the legitimate aims sought to be achieved and exceeded even the broad margin of appreciation accorded to the Government in such matters’.[5] Therefore, the Court decided that there was a violation of Article 10 ECHR.

  • [1] Section 58 of the Courts and Legal Services Act1990 in the UK.
  • [2] As litigants are often unable to fund the insurance premiums the solicitor sometimes fundsthe premium, or a loan is obtained from a bank.
  • [3] On average, lawyers charge between 25 and 50% of the damages awarded to the client; see theCivil Justice Council Report in the UK, Improved Access to Justice, Funding Options and ProportionateCosts (n 148), Appendices, fnn 26 et seq.
  • [4] ECtHR, Case MGN Ltd v United Kingdom, App. no. 39401/04 [2011] ECHR 66, Judgmentof 18January 2011.
  • [5] ECtHR, Case MGNLtd v United Kingdom, App. no. 39401/04 [2011] ECHR 66, Judgmentof 18 January 2011, para. 219.
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