Justice secretary Jack Straw has announced a crackdown on ‘irresponsible’ employment lawyers who he says are exploiting vulnerable clients by taking a large proportion of the damages they win in ‘excessive legal fees’.
The move to curb the use of contingency fee agreements in tribunals – mainly employment tribunals but also the VAT and duties tribunal – is seen as a response to pressure from trade unions unhappy with mass equal pay claims brought on behalf of public sector workers.
The Ministry of Justice is to amend the Coroners and Justice Bill to regulate such agreements, even though research published last year indicated that they throw up few major concerns (see  Gazette, 4 December, 2).
Straw said: ‘Unregulated contingency fee arrangements have been stretched to breaking point by some no win, no fee lawyers, who have exploited vulnerable clients by taking huge slices out of their damages, failed to provide them with proper information, and imposed unfair terms and conditions that have locked them into unreasonable deals.’
In a press interview, Straw went further, saying that some employment lawyers had acted ‘irresponsibly’. He said he is pressing ahead with regulation now, notwithstanding Lord Justice Jackson’s review of civil costs, which is investigating contingency fees.
Regulation will include a cap on the percentage of damages a lawyer can take. Lawyers will also have to provide clear information on total costs, clarify deductions from damages, and provide explicit information on alternative funding methods.
Newcastle solicitor Stefan Cross, who has become synonymous with equal pay claims, said he already complies with these requirements and that a cap could be a restrictive practice.