The insurance industry’s millions to the Tories are set to pay off

Alex Hern reports on the changes to 'no-win no-fee' arrangements set to be made law today, and how insurance companies' million-pound donations to the Conservatives may have helped.


The House of Lords will today vote on measures in government’s legal aid, sentencing and punishment of offenders bill (the LASPO bill) which are expected to greatly enrich insurers at the expense of victims of accidents. As they do so, however, they should be aware of the extent of interference in the bill by the insurance trade body, the Association of British Insurers (ABI).

The part of the bill being voted on today concerns conditional fee agreements (CFAs), commonly known as ‘no-win, no-fee’ arrangements. When access to these was expanded in the 1990s, it was explicitly to pave over the concurrent reduction in availability of legal aid. In today’s bill, however, CFAs are being hobbled at the same time as legal aid is further reduced.

The Law Society, the professional body of solicitors in England and Wales, told Left Foot Forward that:

Under the proposals claimants will have to pay up to twenty five percent of  their legal fees (such as the ‘success fee’) out of their own damages, thus effectively transferring costs from the wrong-doing party (and their insurers) back to the injured victim.

The proposed new system will also put a squeeze on small businesses chasing debtors in the courts and deny those mis-sold financial products the ability to pursue justice.

These changes are ostensibly being made in response to a review of the justice system by Lord Justice Jackson; in actual fact, they have been dangerously cherry-picked from that report.

Sir Rupert Jackson was explicit in saying that the proposals formed a single interlocking package, which would only operate as envisioned if the reforms were introduced as a whole. Key amongst them was the (ignored) recommendation that there should be no further cutbacks in legal aid eligibility or availability.

Desmond Hudson, the chief executive of the Law Society, said that the changes:

Favour the wrong-doer and their insurers rather than the injured person. We call upon the government to think again, otherwise the only result will be rejoicing in the boardrooms of insurance companies at the expense of the injured victim.

Unfortunately, new evidence shows that the government is unlikely to view the insurance companies winning as a problem. Following on from our revelation of the legal aid minister’s £97,000 conflict of interest, the Guardian is today reporting that the Ministry of Justice has uncomfortably close links to the ABI:

Documents, obtained under freedom of information, reveal:

• Policy officials were pressing Kenneth Clarke, the justice secretary, to attend insurance industry events with emails telling the ABI that they were “working on” getting ministers to attend events before the Tory party conference last year.

• In May 2011, the government was in talks with the insurance industry over controversial plans to force defendants to pay their costs even if they win a case – a change known as “qualified one-way cost shifting”. The Civil Justice Council, the body tasked with investigating these proposals, was only informed by ministers in July.

• On 8 September 2011, Wright sent the ABI a press release outlining the proposed ban on referral fees – payments for finding victims of road accidents who could sue for compensation, which the industry had long advocated – the day before it became public.

Twenty minutes later, the ABI returned the favour, sending the MoJ its press release, adding it had briefed the BBC’s Today programme and they would use the information “as a basis” for interviewing the minister.

In addition, new information obtained by Left Foot Forward reveals the extent of the Conservative Party’s financial stake. 40 Conservative MPs, including the prime minister, chancellor, and minister of justice, have or had interests in the insurance industry.

In addition, the central party has received millions of pounds in donations from the industry, or donors involved with it.

The full report contains the conflicting interests of many more MPs, including cabinet ministers Francis Maude and David Willets, Claire Perry, a member of the justice committee, and Lord Hunt of Wirral, a member of the All Party Group on Insurance and Financial Services. It can be found here.

See also:

The principles of British fairness, the rule of law and Magna Carta are at stakeJonny Mulligan, January 16th 2012

Disability minister ignorant on how legal aid cuts affecting disabled peopleAlex Hern, January 10th 2012

Osborne’s slashing of legal aid: Another false economyDr Graham Cookson, January 10th 2012

The missing millions in the legal aid cutsAlex Hern, November 2nd 2011

Exposed: The legal aid minister’s £97,000 conflict of interestAlex Hern, October 11th 2011

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