Hampshire Law Society - Costs
Costs
Last updated: 15 March 2012
Lord Justice Jackson has recommended sweeping changes to litigation funding and solicitors' costs. We believe the proposals will reduce access to justice, increase costs to business and result in a windfall for insurers. Many claimants will lose a substantial proportion of their damages under the plans and solicitors may not be in a position to take on higher risk or lower value claims.
Latest news
Society secures amendments to CFA proposals
Lords further amended the Legal Aid, Sentencing and Punishment of Offenders Bill this week, following our public campaign and behind the scenes pressure. Unless overturned in the Commons, sufferers of respiratory and other industrial diseases caused by employer negligence will be exempt from reforms to conditional fee agreements (CFAs).
Read more about this week's debate
Law Society welcomes delay to civil litigation changes
The Law Society has welcomed the government's decision to defer civil litigation reforms until April 2013. Part two of the Legal Aid, Sentencing and Punishment of Offenders Bill, which incorporates the changes proposed in the Jackson recommendations on 'no win, no fee' arrangements, were expected to be implemented this October.
Read more
Legal Aid, Sentencing and Punishment of Offenders Bill
The publication of the Legal Aid, Sentencing and Punishment of Offenders Bill has confirmed the government's intention to implement many of the changes recommended by Lord Justice Jackson. It proposes to:
- regulate success fees by introducing a cap of 25 per cent of damages in personal injury cases
- prohibit the recoverability of success fees and after the event (ATE) premiums
- introduce damages-based agreements (contingency fees) for contentious business
- gives the power for rules of court to make changes to the current rule on offers to settle (Civil Procedure Rules Part 36) by providing for an additional payment calculated by way of a prescribed percentage of any award
However, key aspects will need to be implemented by subordinate legislation and more importantly rules of court (and even possibly judicial decision):
- The introduction of the 25 per cent damages cap in personal injury cases - Clause 41 will achieve this by introducing additional Conditional Fee Agreement (CFA) conditions into Section 58 Courts and Legal Services Act 1990 (CLSA).
- The abolition of costs recovery of the success fee - Clause 41 achieves this by straightforwardly substituting a new Section 58(6) into the CLSA.
- The introduction of damages-based agreements for contentious business - Clause 41 will achieve this by amending the current DBA provision in Section 58AA CLSA.
- The abolition of costs recovery of the ATE premium - Clause 43 will introduce a new provision, Section 58C, into the CLSA. This imposes a statutory bar on ATE premium recoverability with the limited exception of expert report fees in clinical negligence cases.
- Offers to settle - Clause 51 addresses the additional amount in payable in respect of offers to settle.
- The 10 per cent uplift in general damages - There is no reference to this in the bill and presumably the intention is that the judges will deliver this through case decisions.
- Qualified one way costs shifting - There is no reference to this in the bill and presumably the intention is that this will be introduced by rules of court.
Our concerns
We have voiced concerns in the following areas:
The review of civil litigation costs and funding by Lord Justice Jackson -
- lack of impact assessments
- largely opinion based
- took no account of the impact of the new streamlined road traffic accident (RTA) process, which will account for approximately 80 per cent of all personal injury claims
Government proposals -
- will not comply with interlocking/whole package proposals of Lord Justice Jackson
- insufficient/inaccurate impact assessments conducted
- victims who have suffered harm due to the wrongdoing of others will lose a significant proportion of their damages
- many businesses may suffer if they have to pay success fees
- restriction of success fee to 25 per cent of damages will mean that many claims will be uneconomic to pursue, particularly those of lower value or great complexity
Qualified one way costs shifting -
- likely to dramatically reduce the availability/affordability of ATE products, which will still be required for non-personal injury claims
- will create uncertainty for claimants as they will not know from the outset what, if any, adverse costs liability they may face
- will lead to satellite litigation ('costs wars')
- unsuccessful claimants could lose their homes, face bankruptcy or fall into serious debt
- may result in an increase in litigation costs for successful defendants (especially local authorities and/or SMEs due to certain “self insurance” type arrangements and in public liability cases).
10 per cent increase in damages -
- impossible to police – there will be no way of knowing if 10 per cent is added to damages in cases that settle without judicial intervention
- according to Lord Justice Jackson's figures, nearly 40 per cent of claimants will be worse off
Background: Jackson review
Key proposals in Lord Justice Jackson's final report include:
- success fees and ATE insurance premiums should cease to be recoverable
- awards of general damages for pain, suffering and loss of amenity to be increased by 10 per cent
- amount of damages that lawyers may deduct from a client's damages award for success fees to be capped at 25 per cent of damages, excluding any damages referable to future care or future losses
- referral fees should not be permitted for solicitors in respect of personal injury cases
Read his final report
Read our summary of his report (PDF, 374kb)
Read our full response
Government consultation: Law Society response
In November 2010 the government published a consultation which contained a number of Lord Justice Jackson's recommendations, including qualified one way costs shifting and proposals that damages should be increased by 10 per cent to assist claimants who would have to pay the solicitor's success fees out of any damages awarded.
Read the consultation (PDF)
Read our response