Edward Chen (right)

Law Reform Commission yesterday proposed to set up an independent fund to help middle-income families to launch strong civil lawsuit on a conditional fee basis.

That means the litigants will not have to pay legal fees unless they win the cases.

The commission suggested the self-financed Conditional Legal Aid Fund (CLAF) be managed by a statutory body.

The body will screen applications for lawsuits which have a reasonable prospect of success, and brief the cases to private lawyers.

The fund will cover seven types of cases, including personal injury, commercial, product liability and consumer cases, probate cases involving an estate, employment disputes, professional negligence and defamation case.

The commission said the upper financial eligibility of CLAF should be set between HK$2 million and HK$3 million, which does not include fixed assets.

The commission's conditional fees sub-committee chairman, Edward Chen, said the government needed to provide the start-up capital for the fund, which he estimated would not involve huge public spending.

It has been suggested should the applicants win the case, they should contribute at least 15 to 20 percent of their compensation claims to the fund. The contribution is lower than the 25 to 30 percent usually charged by unregulated claim intermediaries, who take advantage of legal loopholes to make similar "no win, no fees" arrangements for litigants.

Applicants' lawyers would be able to receive a success fee, which Chen estimated could be up to 50 percent, in addition to the normal fees they charge.

Applicants have nothing to lose even if they fail as the fund would pay the opponent's legal cost, but lawyers have the risk of not being paid under such circumstances.

Chen said conditional fees basis was necessary because prohibitive legal costs barred many people from taking legal action.

Currently 30 percent of households in Hong Kong, including most middle-income families, cannot enjoy the two legal aid schemes, which capped the financial resources for each applicant at HK$158,300 and HK$439,800, respectively.

Chen believed the number of civil lawsuits would increase after the establishment of the fund, but ruled out the possibility that applicants would abuse the system by launching meaningless cases.

"More civil lawsuits will indicate that more people have access to justice," he said.

The sub-committee member, Paul Tsieh, believed lawyers, including the well-established legal firms with overseas experience, would be interested in taking conditional fees cases despite the risk of not getting paid.

He said many middle-income people decided not to take legal action to claim compensation as they don't understand legal formalities.

"These cases have high chances of winning," he said.

Welcoming the proposal, Law Society of Hong Kong president Lester Huang said many people who could not afford legal cost decide to litigate in person, and the CLAF would provide assistance to them.

Alvin Lee Chi-wing, chairman of Voice of Middle Class, said that one of his friends decided not to take legal action to claim HK$100,000 business compensation after learning that the lawyer might charge HK$200,000.

"My friend may need to sell her flat to pay the opponent's legal cost if he loses," he said.

Hong Kong Bar Association vice-chairman Clive Grossman, however, said experienced practitioners might not be attracted to take CLAF cases, which would affect the fund service quality.

Another senior counsel Ronny Tong said he feared that lawyers would only select cases with higher chances of winning, while those with less success chance would not be entertained.

"It is not uncommon that cases with less winning chances turn out to be cases with high public interest at later stage," he said.

(HK Edition 07/10/2007 page6)