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‘No Win, No Fee’, Cost‐shifting and the Costs of Civil Litigation: A Natural Experiment

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  • Paul Fenn
  • Veronica Grembi
  • Neil Rickman

Abstract

Expenditure on legal services has been rising and has attracted considerable policy attention in the UK. We argue that an important reason for this increase stems from the introduction of ‘no win no fee’ schemes in 1995 and a subsequent amendment's in 2000 which allowed claimants to shift additional costs onto losing defendants. We describe how this may have increased expenditure on legal claims and we test for the 2000 amendment effect using a regression discontinuity design on a dataset of employers’ liability claims. We find that costs increased by approximately 25% post 2000, consistent with our theoretical predictions.

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  • Paul Fenn & Veronica Grembi & Neil Rickman, 2017. "‘No Win, No Fee’, Cost‐shifting and the Costs of Civil Litigation: A Natural Experiment," Economic Journal, Royal Economic Society, vol. 127(605), pages 142-163, October.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:605:p:f142-f163
    DOI: 10.1111/ecoj.12532
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    Cited by:

    1. Baptiste Massenot & Maria Maraki & Christian Thoeni, 2016. "Legal compliance and litigation spending under the English and American rule: Experimental evidence," Cahiers de Recherches Economiques du Département d'économie 16.19, Université de Lausanne, Faculté des HEC, Département d’économie.

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