The government will legislate to shake up the civil justice system in England and Wales, Kenneth Clarke has announced.
It is hoped that millions of pounds could be saved by reforms outlined by the justice secretary to the Commons this afternoon.
The existing 'no win no fee' arrangements, which require defendants to pay their lawyer a fixed fee, will be brought back to "first principles".
A consultation will take place on ending the recoverability of success fees and insurance premiums, awarding claimants a ten per cent uplift in general damages where they suffer loss and protecting the majority of personal injury claimants from having to pay costs.
"The current system is slow, stressful and expensive and change is long overdue," Mr Clarke told MPs.
"My aim is to help people avoid court wherever possible while reducing costs where it is unavoidable."
Many of Mr Clarke's proposals are based on a review of the system completed by Lord Justice Jackson last year.
Earlier the justice secretary said a "more sensible" no win no fee arrangement was appropriate.
"I think it's extremely important that for both plaintiffs and defendants the system is made more friendly," he told the Today programme.
He said ordinary people had a "mortal dread" of solving a problem through the law courts because of the heavy expenses involved.
"The cost and the time it takes should be reasonable so that people who really have a serious dispute are prepared to contemplate whether they will put some of their own money at risk by going to a lawyer in order to get a remedy," Mr Clarke added.
"At the moment you say to someone 'you should go to a lawyer' they tend to go pale, not because they fear lawyers, but because they know there are a great deal of costs involved and they are daunted by our rather inaccessible legal system."