For some time the insurance industry has been pressing for a change in the way legal action is funded and compensated. This is not new. There has always been pressure to change the system to make it less beneficial to injured people. The difference this time is the sheer scale of the changes which are being implemented on 1 April.

Starting at the beginning, an injured claimant will now be told that they are no legally longer responsible for the defendant’s legal fees if their claim is unsuccessful. This, we are told, is of great assistance to claimants. No longer will they be worried about paying legal costs which could be substantial.

But, and there is always a but – this does not mean that the claimant will get away with no payment. Quite the opposite. The claimant currently can get insurance against the risk of paying these costs. Such insurance covers the defendants’ legal costs if the claim is unsuccessful. The claimant’s lawyers will normally be acting on a “no win, no fee” basis, but the insurance also covers the other costs incurred by the claimant in bringing the case, such as experts’ fees. In other words if the claimant does not succeed, all their costs should be covered by insurance. Most importantly, the reasonable premium for this insurance is payable by the defendant if the claim is won (and is usually waived by the insurers if the claim is lost).

Now the claimant will not be entitled to recover the cost of insurance except for some very limited circumstances in clinical negligence cases. The unsuccessful claimant may therefore be liable for experts’ fees, court fees and other expenses. Medical reports can cost several thousands of pounds which most claimants do not have. Alternatively, the claimant may be able to take out the insurance but will have to pay the premium out of any compensation received. Such premiums are likely to be hundreds of pounds.

Lawyers acting on a “no win, no fee” basis charge a “success fee” in the cases which they win. The success fees in these cases covers the lawyers for the cases they lose, for which they are paid nothing. Success fees enable lawyers to act on “no win, no fee” and still remain in business. At present, where cases are won, the success fee forms part of the legal costs paid by those responsible for the injury, so that the claimant receives all their compensation. After 1 April, the success fee will no longer be payable by the defendant and will be payable by the claimant out of the money intended to compensate them for their injury. Claimants will lose up to a quarter of their compensation in this way. Currently most claimants do not pay any legal costs out of their compensation. At present, all legal costs are paid by those responsible for the injury, including the success fee and insurance premium.

For those who are eligible there is of course legal aid for clinical negligence cases. This is to be abolished on 1 April. Only a very limited category of claimants will be eligible – those who suffered brain injury near or at the time of birth. Significant cases where claimants are currently eligible for legal aid will no longer receive this help.

This means someone has to fund the medical reports and investigations through a case. Is it likely that a claimant who would previously have been financially eligible for legal aid will have a spare few thousand pounds to pay for a medical report? Hardly. These are the very people who cannot assist with legal costs through a case.

What happens if the case is not straightforward? If the case is simple (if such a thing exists) then perhaps a firm can justify spending funds on reports on the basis that these will be repaid. But what happens when the case is more complicated and by no means certain? Who then pays for all of these investigations?

The insurance industry is powerful and effective at its lobbying. It has been successful at abolishing legal aid for personal injury claims and now for most clinical negligence claims and replacing this with “no win no fee” against the wishes of the legal profession. Some claims are now subject to fixed costs, rigid procedure and all sorts of restrictions.

Clearly there have to be rules in legal action. We all accept that legal costs have to be reasonable. What is not clear is why people injured by someone else’s negligence should be paying legal fees and expenses out of their compensation.

All potential claimants should seek advice now. They may not be able to pursue a claim once the brave new system comes into force on 1 April.