Labour retreats on cuts to legal aid cutbacks aim to save pounds 100m

THE LORD Chancellor has retreated on plans to withdraw legal aid from almost all civil cases, but announced yesterday that most disputes involving personal injuries are to be replaced with "no win, no fee" arrangements in court.

Lord Irvine unveiled proposals to cut the pounds 1.4bn legal aid budget by pounds 100m a year. However, he has postponed a controversial plan to remove financial aid for medical negligence claims.

The initiatives are aimed at reducing the expanding legal aid bill, while giving people on modest incomes who cannot afford to pay for private action, a way of bringing cases to court.

Lawyers yesterday attacked the plans to remove legal aid from most personal injury cases - such as those arising from car accidents - arguing that solicitors may refuse to take up complex cases in the future because of fears that they could lose huge sums of money.

Under the "conditional fee" system lawyers get nothing if they lose a case, but can charge up to double the fees if they win.

In the proposals, contained in the consultation paper, "Access to Justice with Conditional Fees", the Lord Chancellor intends to replace legal aid with "no win, no fee" in a number of areas by summer. As well as car accident cases, they also include industrial injury or illness cases, arguments over wills, boundary and business disputes. But cases that can be shown to have a public interest because of the implications for other victims may still get taxpayers' support.

Conditional fees were made optional for personal injury cases in 1995. So far, the Government said, more than 34,000 cases have been brought.

In October, Lord Irvine said he wanted to "exclude most claims for money or damages from legal aid" by April, but lobbying from lawyers and consumer groups appears to have changed his mind.

The consultation document says that medical negligence cases will continue to be eligible for legal aid, at least for the next two or three years, after which the Lord Chancellor is said to want it replaced by a "no win, no fee" arrangement.

Legal aid will still be available for family and criminal cases, judicial reviews, problems involving housing, and people defending claims against them for money or damages.

Yesterday's paper said civil and family legal aid had been rising at an "unacceptable rate", tripling over seven years to pounds 671m, while the number of people helped has fallen.

The Law Society, which represents solicitors, strongly criticised the plans to replace legal aid for personal injury cases. A spokesman said: "There are many people who will fall through the net. Not all personal injury cases are straightforward and lawyers may be reluctant to take on complex ones, or where the damages claimed are very high."

The Bar Council, representing barristers, welcomed the decision to postpone the withdrawal of legal aid from many cases, but criticised ending it for personal injury cases.

"To force people who have had accidents at work, or on the road, to fund their claims by 'no win, no fee' is illogical, unfair and premature," said chairman Heather Hallett QC.