Many victims of miscarriages of justice are now in the ‘appalling situation’ of having no recourse to compensation following a Court of Appeal ruling last week, lawyers have claimed.

The court refused to reinstate the discretionary compensation scheme that the then Home Secretary Charles Clarke abolished in April 2006. It also rejected a bid by six law firms to overturn reductions in the fees they are paid for handling compensation claims.

Both challenges were on the basis of a legitimate expectation that the changes would not be made without consultation.

The discretionary scheme paid out to those who overturned their convictions during the normal appeal process, as opposed to the statutory scheme for those freed later on fresh evidence.

Susie Labinjoh, partner at London firm Hodge Jones & Allen, who acted for the individuals challenging its abolition, said her clients were devastated by the ruling.

‘We are now left with the appalling situation that many victims of miscarriage of justice will have no effective remedy for the terrible injustice which they have suffered,’ she said. Subject to public funding being available, she will seek to appeal to the Lords.

John Halford, a partner at Bindman & Partners, said the ruling could lead to an increase in litigation because that was the only avenue left for some. He led the work on behalf of the six firms, which were previously able to recover reasonable and proportionate fees, but now only get the equivalent of Legal Help. The other firms were Bhatt Murphy, Hodge Jones, Hickman & Rose, Fisher Meredith and Birds.

‘As the Court of Appeal recognised, it is not possible to provide an adequate service at Legal Help rates,’ Halford said. The firms would now have either to subsidise the work or require victims to contribute to their fees out of their compensation. Bhatt Murphy partner Tony Murphy described the second option as ‘deeply unpalatable’.