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Mr. Chris Mullin (Sunderland, South): I broadly welcome my hon. Friend's statement. The fact that he has obviously taken on board many of the representations made in the past few months is a cause for celebration, not criticism. It was always inevitable that there would be teething troubles with such a radical change. As long as he is prepared to listen to the representations made from benign quarters, I see no long-term problems with the changes.
On medical negligence, should not we be moving towards no-fault compensation for the most serious cases? They can sometimes drag on for up to seven years and that is in nobody's interest except the lawyers.
Mr. Hoon:
Benign is not a word that I have often associated with my hon. Friend, but I can see that I am wrong. I appreciate his support. The figures for recovery in medical negligence cases show that only 17 per cent. of cases produce recovery of more than £50. The average recovery appears to be about £4,000, with £4,000 paid in costs to achieve that. That makes a strong argument for no-fault compensation.
There are other difficulties about no-fault compensation that we would have to address. This might be one of the areas where such an approach is appropriate and, together with colleagues from other Departments who have a clear interest in this matter, we will be considering carefully whether that is the appropriate way of taking these cases forward.
Mrs. Eleanor Laing (Epping Forest):
While I welcome the Government's aim of reducing the burden of legal aid on the taxpayer, is not the Minister concerned that making solicitors' firms bear the financial risk in some cases is an unbearable burden for smaller firms and makes the lawyer personally involved in his or her client's case? Is he not concerned that there is a danger that the objective nature of the legal profession itself will be undermined?
Mr. Hoon:
May I deal first with the point about whether solicitors can afford the costs of this sort of approach? The Government have commissioned some research by KPMG into the business case for solicitors' firms undertaking much of their litigation under conditional fees. The report has been received and will be published in due course. I hope that the hon. Lady will study it with care and decide, in the light of the research conducted, whether or not it is possible for small firms to conduct widespread conditional fee arrangements. We
Conditional fees, particularly as we propose to extend them to the great majority of cases, will extend the opportunities of the great majority of citizens to take legal cases before the court. I said that only the very rich and the very poor are currently in a position to take cases before the court. I hope that the hon. Lady will accept that our proposals will open up access to justice for the great majority of people in our society. That should provide lawyers with financial opportunities that are not currently available to them.
I appreciate the hon. Lady's concern about lawyers being involved in their clients' cases and that potentially affecting their judgment of what is appropriate. However, I hope that she accepts that there is no evidence so far of that happening under the conditional fee agreements that have been concluded to date.
Moreover, the fears to which I referred when replying to the hon. and learned Member for Harborough (Mr. Garnier) have not been borne out in any of the research. Indeed, in the more complex cases, there will in any event be a member of the Bar who ought to be able to bring a degree of objectivity to bear on the assessment of the case. We should see a degree of partnership developing between solicitors and barristers in the assessment of risk in given cases and the appropriate level of recovery.
Madam Speaker:
Order. We cannot continue with these long questions and very long answers. I understand the complexity of the statement, but I should like to call as many hon. Members as possible and for that we need to have shorter questions and answers.
Mr. Andrew Dismore (Hendon):
As a specialist personal injury solicitor, may I ask my hon. Friend whether he agrees that, if fewer cases succeed under the revised proposals, the Government could be a net loser; and that the acid test will be whether more cases succeed? In that context, I welcome the proposal to extend the recovery of the success fee and insurance premium from insurance companies, as opposed to taking them out of the victim's pockets. Will my hon. Friend comment on whether block contracting will still be permitted as part of these developments?
Mr. Hoon:
We anticipate that more successful cases will be brought as a result of these proposals, because one of the advantages of allowing lawyers to participate and risk their own funds in the prosecution of cases is that they will have an interest in selecting good cases to take forward. We believe that that is a good thing. As for my hon. Friend's various more technical points, I hope that he will accept that we are concerned to take forward a modernisation of the justice system and that contracting will be a feature of it.
Mr. Edward Leigh (Gainsborough):
The Minister used the word "modern"--naturally--several times in his statement. Why is it necessarily modern or right to move
Mr. Hoon:
I do not accept for a moment that we are moving in the American direction. I hope that the hon. Gentleman will accept that we are seeking to achieve a situation where only good cases are brought before the courts and our courts are not occupied by cases of dubious merit that are drawn out over weeks, months or even years. That will be precisely the opposite of the American experience. We do not intend to go down that route.
Ms Hazel Blears (Salford):
One of the attractions of conditional fee agreements is that they should free considerable resources to enable us to extend our community legal service. That will be of great assistance to my constituents in the inner city, where legal advice is often thin on the ground. Will my hon. Friend tell us about the time scale for the community legal service and when we can hope to see some flesh on its bones?
Mr. Hoon:
I am grateful for my hon. Friend's observations. Unless we can control the cost of the existing traditional legal aid system, we shall not have the resources to create a community legal service. Work is being conducted as a matter of urgency in the Department. A team has been established to develop proposals for a community legal service. I hope to be able to tell my hon. Friend the outcome of that work as soon as possible.
Mr. David Ruffley (Bury St. Edmunds):
The Minister skated over the crucial issue of the affordability of insurance premiums for those poorer households that want to go down the conditional fee route. Which insurance companies has he spoken to? Have they given him reassurances that they can price insurance policies so that the premiums are affordable to the poorest?
Mr. Hoon:
Ministers and officials in the Department have had meetings with a range of insurance companies. The speech in Cardiff last October in which my right hon. and noble Friend the Lord Chancellor set out the principles has concentrated minds remarkably. Lawyers are thinking more constructively. The insurance industry is interested in such work. The average cost of PI insurance is in the order of £155. Insurance products are being made available that will avoid those costs being borne by individual litigants who are unable to meet them. There are a variety of ways of funding insurance. A partnership between insurers and lawyers to sustain the costs of litigation in this developing market should satisfy the hon. Gentleman.
Mr. Michael Jabez Foster (Hastings and Rye):
I congratulate my hon. Friend on having listened and on making it clear that this is not a cost-cutting exercise, but a means of redistributing the funds available. When litigants cannot afford to take out insurance, would it be possible for the premiums to be paid from the transitional fund? Would it be possible to extend legal expenses insurance, perhaps by tax relief, so that many more folk could choose solicitors without personal cost?
Mr. Hoon:
My hon. Friend has made valuable suggestions in the past. I am grateful to him for
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy):
I have mentioned previously two savings that the hon. Gentleman's Department could make without affecting anyone. First, an appointments system in magistrates courts would save £42 million at a stroke. Secondly, in family and ancillary relief cases, arguments over the slightest issues can often result in lawyers' fees 10 or 12 times greater than the sums being argued about. May I draw the hon. Gentleman's attention to those economies before he hits people who validly want to make personal injury claims and have no lawyer to take them on?
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