No win no fee

Creditors pursuing unpaid debts in court will be exempt from new rules on no-win, no-fee lawyers, thanks to legislation introduced by the government.

The exemption for insolvency practitioners (IP) means that payouts awarded in successful cases will not be restricted, as would have been the case before the legal amendment.

Liquidators, trustees in bankruptcy and administrators will all be exempt from a clampdown on the controversial no-win, no fee litigation funding and – significantly – with no time restrictions imposed.

The Association of Business Recovery Professionals, R3, welcomed the exemption that is similar to the one made for defamation cases.

Frances Coulson, R3 council member, said: “The exemption allows Insolvency Practitioners to pursue errant directors who have run off with company funds, or in serious cases, committed fraud. This costs the business community and the taxpayer hundreds of millions of pounds each year. Directors, who act improperly and strip value out of businesses, should not be allowed to benefit at the expense of legitimate business.”

Legislation was introduced to outlaw conditional fee arrangements (popularly known as no-win, no-fee deals), following recommendations made in a government-commissioned report.