No win no pay legal system considered

The Dutch legal system may be about to change to allow the introduction of "no win no pay" lawyers, something that is currently illegal in the Netherlands. JOEP DERKSEN asks what this might mean for the legal system of the low country.

The political parties VVD (Volkspartij voor Vrijheid en Democratie; Liberals) and PvdA (Partij van de Arbeid; Socialists) have come up with plans to introduce a "no win no pay" method in the legal system. In this way, anybody can hire a lawyer and he/she will only be paid when the court case is won.

This system will first be introduced on a small scale and on a trial basis, but when it is successful, it will be put into practice throughout the country. Opponents fear for "American" circumstances, where, for instance, million euro claims are pressed for drinking coffee that is too hot.

The proposal was handed in by Members of Parliament Ard van der Steur (VVD, a lawyer himself) and Jeroen Recourt (PvdA). They say that they are worried about "the gap between those who can start legal procedures and those who are not able to." According to them, the average Dutch citizen is not able to start a court case, because it is way too expensive.

Van der Steur continues: "It requires an immense form of solidarity to maintain the current form of legal aid for a very restricted group of people, whereas a large part of society has to pay (taxes) for this." The two political parties have asked Secretary of State Fred Teeven (VVD) to look for alternatives, such as mediation or legal aid insurance, but also the introduction of the "no win, no pay" system. "All possibilities that contribute to a more payable legal aid need to be investigated and with a ‘no win, no pay’ system, large parts of society can obtain affordable legal aid," Teeven said.

Both the VVD and PvdA are of the opinion that such a system can be introduced in many different ways and, because of that, "unacceptable risks can be avoided." However, eight years ago another attempt to start a "no win, no pay" system was banned. It is still currnelty illegal for lawyers to use this payment method. Van der Steur and Recourt therefore propose to start a trial project and to set this up in association with the Dutch Order of Lawyers (Nederlandse Orde van Advocaten, NOvA).

Teeven is willing to start this experiment. He refers to the NOvA, who also states that access to the legal system can be improved, especially when it concerns damage due to injury and death. Currently, the financial barrier is sometimes too high; not only because of legal expenses, but also the costs of hiring medical experts and work advisors and the possible burden of the trial expenses should a case go awry.

"I also concur that it is better for the access to the court system to introduce new payment arrangements," Teeven continues. "But this should happen under one condition; that the independence of the lawyer will not be put in danger. Therefore, I have asked the NOvA think about starting an experiment with a result orientated reward."

Both the NOvA and the government have the intention that this new system will be introduced for the benefit of those citizens who have a "realistic claim in damages." But they also admit that there exists a weak side to this new development. The consequence of a result orientated reward system can be that the lawyer will develop a "substantial own financial interest" in the outcome of the court case. This could affect the necessary independent position of the lawyer; one of the core foundations of the legal system.

With a ‘no win, no pay’ system, in any form, it will not be possible to oblige lawyers to start a court case based on such a way of payment. On the other hand, there is fear of price increases by lawyers who are willing to fight in court based on an insecure financial outcome: they may increase their prices and/or commission fees. But according to Teeven, there is no danger of the introduction of "American situations."

In the United States, excessive claims are being brought to court and another trend is the so-called "ambulance chasing." Lawyers chase after ambulances or visit hospitals in order to talk to patients and convince them to start legal procedures to whoever was responsible for their injuries.

Teeven thinks this will not happen in the Netherlands. When a victim in this country cannot work anymore, the financial consequences are mostly dealt with through social security. In the US, most people can only get an expensive private insurance and for many the expense of such insurance is too high.

Another danger that could go hand-in-hand with the success of the "no win, no pay" system is the concept of punitive damages; an extra financial punishment on top of the amount for the actual damage suffered. Teeven does not believe that punitive damages will be introduced in the Dutch court system. "We do not have a jury, whose members may have an emotional involvement and therefore more often favour the victim," he explains. "In addition, many conflicts are settled out of court. I consider the risks on an excessive claim culture relatively low.’

An experiment will be set up on a small scale. If the results are positive, they may lead to the official introduction of the "no win, no pay" system in the Netherlands. It is not yet known when the experiment will start. Van der Steur is happy with this outcome. "This trial project will make it possible to experience the possible risks and how to deal with them."

(Published in The Holland Times, May edition 2013)