The Coroners and Justice Bill currently before Parliament will attempt to introduce new provisions to allow the Government to regulate currently unregulated damages-based arrangements, commonly known as “contingency fee arrangements” or “no win no fee”.

Due to a long-standing interpretation of the law which classes employment law as “non-contentious”, conditional fee agreements in this area of law are currently not regulated by statute. They are mainly used by employment law solicitors working on behalf of employees - the Stefan Cross law firm is a notable user of “no win no fee” arrangements, utilising the system to great success in fighting equal pay claim cases for local government employees.

The Ministry of Justice will soon publish a consultation paper to gather views from interested parties on what the details of the new regulations should be. It is likely that some form of cap will be put in place to limit the amount that lawyers can recover under “no win no fee” arrangements in employment tribunals.

The Justice Secretary Jack Straw commented on the proposals, saying: “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. The time has come for these arrangements to be subject to proper regulation to protect the interests of consumers, and that is what the government will legislate to do.”

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