Legal aid should be scrapped for almost all civil compensation cases, a right-wing think tank has argued.

The Adam Smith Institute said the current system and no-win no-fee deals were biased towards claimants and offered “dubious value for money”.

It said the UK’s “compensation culture” encouraged people to make claims effectively risk-free.

Ministers said no-win no-fee deals had made justice more accessible, but high costs were now of “serious concern”.

The Adam Smith Institute (ASI) called for the launch of a new system within the no-win no-fee framework, which included a cap on the costs recoverable from unsuccessful defendants.

‘Fundamentally flawed’

Executive director Tom Clougherty said: “The current system of civil litigation in the UK is unfairly stacked in favour of claimants.

“We need to address the risk-free, compensation culture and the excessive costs it brings with it.

“The reforms we’ve proposed will save the taxpayer money while also ensuring a system of funding access to justice that is simple, robust and fair.”

The ASI report said the UK’s over-generous legal aid system was “fundamentally flawed” as the bias in favour of claimants encouraged speculative litigation.

It called for a cap on lawyers’ success fees and so-called after-the-event (ATE) premiums – insurance taken out on the risk of paying opponent’s legal costs.

It argued that capping costs would also deter claimants from bringing weak, low-risk cases, while preserving access to justice in the absence of civil legal aid.

The Ministry of Justice said it had announced the start of a “fundamental” look at the legal aid system to “innovate” and provide value for money.

A spokesman said no-win no-fee style arrangements had played a role in giving access to justice to a range of people.

But he added: “High costs under the existing arrangements have now become a serious concern.

“We will be consulting on how to achieve significant costs savings, whilst still enabling those who need access to justice to obtain it.”