'No win, no fee' civil action spikes ahead of law change

Louise Howarth, a senior associate at legal firm Eversheds, said the firm was seeing a rise of private claims in the food and drink sector.

"A change in case law next year will make it more expensive for claimants so I think we are seeing this issue crystallising at the moment for food and drink businesses,"​ she said.

She said manufacturers were particularly susceptible to civil actions for allegations of odour and noise nuisances.

Under present rules, a claimant can take out a 'no win, no fee' arrangement. If this is successful, the manufacturer can be liable for 100% of the legal costs as well as a "percentage uplift".​

'No win, no fee' arrangement​

Howarth added: "This is a pure profit percentage uplift that the law firm can ask for.​

"For example, if they are charging £100,000 costs and have an 80% uplift, that's £180,000 that will go to the solicitors."​

The claimant also often takes out After The Event (ATE) insurance against the risk of having to pay out anything themselves if they lose which they can then claim back from the manufacturer if they win.

Low risk for the claimant​

"The combination of 'no win, no fee' and ATE means this kind of action is pretty low risk for the claimant," ​she added.

"While the damages often awarded to claimants are relatively small, the settlement of costs can be significant."​

However, from April, the rules are due to change as part of a wider shake-up of civil litigation costs.

While claimants will still be able to take out a 'no win, no fee' arrangement, they will be responsible for any percentage uplift profit and they won't be able to claim back insurance premiums.

"Damages will be uplifted by 10% to take this into account, but this change is really reflecting the view that claimants should have an interest in the costs occurred,"​ said Howarth.

"These changes will not be retrospective, so we are increasingly seeing many legal firms trying to take action now before they come into effect."​