No win, no fee system faces reform: Ken Clarke says Ambulance-chasers drain NHS

No win, no fee legal arrangements are to be overhauled in a bid to reverse an "explosion" in lawyers' fees, it was announced today.

Justice Secretary Kenneth Clarke said the costs associated with the conditional fee personal injury claims had become a burden on businesses and public bodies like the NHS.

Under a new US-style system, some of the legal fees will be deducted from the plaintiff's damages rather than being charged entirely to the defendant.

The move is intended to cut down the number of cases and make the justice system fairer for defendants who cannot afford to defend themselves from no win, no fee lawsuits.

Mr Clarke said the problems stemmed from reforms by the former Labour government which were intended to make no win, no fee more attractive to lawyers.

"The cost of the claims has absolutely soared and it's become a terrible burden for a lot of people who are sued," Mr Clarke told BBC Radio 4's Today programme.

"Businesses find it very expensive and particularly the NHS, which pays out a fortune in lawyers' fees every year because of the way it's been changed.

"We are not getting rid of no win no fee, we are going back to the way in which it started in the 1990s.

"There were changes made in 1999 to make it more attractive and they unfortunately have gone too far, they've led to an explosion in the costs."

Most defendants found that they were now paying out more in laywyers' fees than in damages to the plaintiff, Mr Clarke said.

In 2008/9, the NHS paid out £312 million in damages and £456 million in lawyers' fees, he said.

Mr Clarke added that the system needed to be "more sensible" and "more friendly" to both plaintiffs and defendants.

The reforms, which he is to announce to the Commons this afternoon, follow a major review of the system by Lord Justice Jackson.

But Muiris Lyons, president of the Association of Personal Injury Lawyers, warned that fewer people would have access to justice if the system was changed.

"At the moment the scheme provides for access to justice for anyone who's been involved in an accident and we say that's a good thing," he said.

He added: "This was brought in because the Government wanted to get rid of legal aid for personal injury cases.

"It didn't want lawyers to be paid win or lose, it wanted them to have a vested interest in the outcome.

"We've managed to make no win, no fee work in a way that provides access to justice for anybody who is injured."