Speaking on the BBC Radio 4 Today programme Mr Djanogly said:
‘The cause is the costs system. At the moment claimants are able not to lose a penny even if they lose their case. And if you can’t lose anything, why should you not sue, even if your chances of winning are negligible? That is the mechanics of the compensation culture.
‘The new law we are proposing will mean that the mark-up for a winning claimant’s fees will be paid from claimant’s damages, not the defendant. So claimant lawyers will be firstly more cautious to take on cases, and claimants will have an interest in what they are paying their lawyer. That will be the key to reducing costs. By taking costs out of the system, there will be less money for referral fees.
‘There is no doubt that the way the system works at the moment gives a perverse incentive to people to ramp up their claims. We have to reverse the mechanics of a system which is having not only financial, but cultural implications, in terms of people rushing to the courts, putting in claims unnecessarily.’
Listen to the full interview with Justice Minister Jonathan Djanogly
Proposals to reform to ‘no win, no fee’ deals and the way civil disputes are settled are included in the Legal Aid, Sentencing and Punishment of Offenders Bill