'No Win, No Fee' and the Costs of Civil Litigation

26 Pages Posted: 17 Jul 2012

See all articles by Neil Rickman

Neil Rickman

University of Surrey - Department of Economics

Paul Fenn

University of Nottingham

Date Written: July 17, 2012

Abstract

Expenditure on civil litigation in the UK has been rising for much of the last two decades and has attracted considerable policy attention. We argue that an important reason for this increase lies with changes to the implementation of `no win no fee' arrangements. These interventions allowed claimants and their lawyers to shift the risk of paying legal costs onto defendants and, as a consequence, reduced the incentive for claimants to monitor these costs. We use a simple theoretical model to illustrate how these interventions may have increased costs before presenting evidence using data on employers' liability claims. As well as helping us to understand the role of previous policy in relation to trends in litigation costs, our results also allow us to assess current policy proposals aimed at reversing these trends. In addition, the paper indicates the important interplay that exists between the effects of legal fees and procedural rules for allocating costs between litigants; an issue of wide jurisdictional interest.

Keywords: Litigation, Cost-shifting, Legal fees, Risk, Policy

JEL Classification: K4

Suggested Citation

Rickman, Neil and Fenn, Paul, 'No Win, No Fee' and the Costs of Civil Litigation (July 17, 2012). 7th Annual Conference on Empirical Legal Studies Paper, Available at SSRN: https://ssrn.com/abstract=2110343 or http://dx.doi.org/10.2139/ssrn.2110343

Neil Rickman (Contact Author)

University of Surrey - Department of Economics ( email )

Guildford
Surrey GU2 7XH
United Kingdom
+44 1483 689 923 (Phone)
+44 1483 689 548 (Fax)

Paul Fenn

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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