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Abstract

In both the United States and England, accident victims are often entitled to compensation from negligent defendants and the defendants’ liability insurers. Accident claimants in the two countries, however, have different ways of funding their claims and litigation. In the United States, claimants use the American-style contingent fee agreement to pay for lawyers. In England, claimants have relied on legal aid and the two-way costshifting “English Rule,” pursuant to which a prevailing party can recover his solicitor’s fees and litigation costs, including counsel’s fees, from the losing litigant. Over the last decade, dramatic changes have been made to the English litigation funding system for many areas of law, particularly personal injury (with the exception, to date, of clinical negligence). The English eliminated legal aid and suddenly introduced the conditional fee agreement, without changing the English Rule. Between 2000 and 2003, disputes were continual, as claimants and their representatives pushed the new rules to the outer limits, and defendant liability insurance companies resisted in any way they could. This article will explain the contentious debate. Part II will compare the American and the traditional English way of funding personal injury litigation, particularly minor road accident cases. Part III will discuss some background factors that influenced the recent changes in England. Part IV will examine the first revised litigation funding system, and Part V will demonstrate how the development of after-the-event insurance and the second revised litigation funding system ameliorated some problems but also generated new ones. Part VI will discuss the consequences of the second revised litigation funding system, with particular emphasis on the development of claims management companies, the extensive satellite litigation and, where appropriate, comparisons to the U.S. Supreme Court’s resolution of similar problems. Part VII will conclude by noting that there is now a moment of repose in the struggle but no guarantee that dramatic disagreement will not reappear.

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