Mansfield QC plans to look to City to fund 'no win, no fee' cases

City law firms could help fund some civil litigation cases as part of sweeping proposals to overhaul litigation funding mechanisms in the UK.

Guy Mansfield QC, acting on behalf of the Bar Council, is considering asking firms to invest in a fund that would be used for cases such as professional negligence, personal injury and employment disputes, which currently come mainly under the 'no win, no fee' banner.

Mansfield, who is also considering inviting insurers and banks to contribute to the Contingent Legal Aid Fund (CLAF), will report to Lord Justice Jackson by the end of July as CLAF forms a key part of Jackson's widescale litigation costs review.

CLAF is intended to become a self-funding pool of money to bring cases not covered by the existing legal aid system. Up to 10% of the damages from successful cases could be put back into the pool.

Those investing would probably make the same return as if they had left the money in the bank, however, it is hoped investors would see it as a more positive move in pro bono terms.

Mansfield said: "Substantial law firms may take a view that CLAF is a useful way of investing money. You would get as good a return as having it in the bank, it would be a good pro bono measure and increase access to justice."

Major law firms including Herbert Smith, Freshfields Bruckhaus Deringer, Ashurst and Clifford Chance all told Legal Week they would be interested in speaking to Mansfield about the idea. However, they warned that CLAF would only work if changes were also made to existing litigation funding mechanisms such as conditional fee arrangements and after-the-event insurance.

Eversheds head of litigation Ian Gray said: "We would be interested in having a conversation with Mansfield about CLAF. Anything that develops pro bono work and access to justice is good. However, the availability of cash in this market may not be what it was compared with a few years ago."

Ashurst litigation partner Edward Sparrow said: "We are always keen to look at pro bono measures and access to justice initiatives. We are also involved in the consultation on Jackson's costs review of which this is a part. However, as Jackson says, there are many detailed issues which have to be addressed before CLAF can become a reality."