Coalition breaks its silence on Jackson proposals
Coalition breaks its silence on Jackson proposals
A frisson of excitement reverberated around
legal circles today with the release of the much anticipated
ministerial statement upon the “Review of Civil Litigation Costs”
before Parliament’s summer recess.
Since the publication of Lord Justice
Jackson’s Final Report in January 2010 there had been much
speculation as to how Government and latterly the Coalition would
tackle the proposed reforms and take them forward. The Ministerial
statement confirms;
Highlights
- Consultation on CFAs and contingency fees to
be taken on as a priority, factoring in current Legal Aid reform
proposals and Lord Young’s Health & Safety Law and Compensation
Culture Review to reduce spend whilst preserving access to
justice.
- Behind the scenes work to continue apace on
Fixed Recoverable Costs and regulation of referral fees.
- CJC to consult over the summer upon third
party funders’ code of conduct
- Judicial case and costs management to proceed
concurrently with this review under auspices of the Judicial
Steering Group.
Comment
The further consultation could be seen to
dilute the recommendation from Jackson that the Review be
introduced “as a package of interlocking reforms”. Whilst
many Compensators will be concerned that this may open up
Jackson for further debate ,those concerns should be tempered by
the positive that it is reassuring to see that the new Government
apparently has the legislative impetus to take action and not just
park the Review as some commentators had feared.
Similarly, it is encouraging that a joined up
approach is being pursued as Jackson’s recommendations will
now fall to be considered alongside Lord Young’s review and both
the recently announced Legal Aid reforms and the wider attempts to
“right-size” the infrastructure of Her Majesty’s Court
Service.
It seems inevitable that the further
consultation envisaged in the Autumn will crystallise the
administration's plans in this area.
The statement on Reform of Civil
Litigation Funding Arrangements by Parliamentary Under-Secretary of
State for Justice (Jonathan Djanogly MP)
I am today announcing the Government's intention to consult
in the autumn on implementing Lord Justice Jackson's
recommendations on the reform of funding arrangements in his
report, Review of Civil Litigation Costs: Final Report, published
on 14 January 2010. We will be consulting in particular on
the reform of Conditional Fee Agreements (CFAs) which should lead
to significant costs savings, whilst still enabling those who need
access to justice to obtain it. The Government is therefore
taking these proposals forward as a matter of
priority.
Lord Justice Jackson was appointed by the then Master of the
Rolls in January 2009 to review the rules and principles governing
the costs of civil litigation and to make recommendations to
promote access to justice at proportionate costs. Sir
Rupert's independent and comprehensive report makes a broad range
of significant recommendations for reducing costs in the civil
justice system in England and Wales. The Government is very
grateful to Sir Rupert for his report.
CFAs have played a role in giving access to justice to a
range of people. However, high costs under the existing
arrangements have now become a serious concern, particularly in
clinical negligence cases against the NHS Litigation Authority and
in defamation proceedings.
CFAs are a type of 'no win no fee' agreements under which
lawyers are not paid if they lose a case, but can charge an uplift
on top of their base costs - otherwise known as a 'success fee' -
if they win. Success fees allow lawyers to cover the costs of cases
they take on which do not succeed. The success fee can be up
to 100% of base costs. After the Event (ATE) Insurance can
be taken out by parties to a CFA funded case to protect them
against the risk of having to pay their opponent's costs if they
lose. Under the current arrangements, success fees and ATE premiums
can be recovered from the losing opponent in addition to the base
costs.
Sir Rupert recommends significant changes to the current
arrangements for CFAs. He proposes abolishing the recoverability of
both success fees and ATE insurance premiums; this would require
primary legislation. In addition, to assist claimants to meet
the cost of the success fees for which they would now be liable, he
also recommends an increase of 10% in the level of general damages
for personal injury, defamation and other tort claims; and a regime
of qualified one way costs shifting in specified proceedings,
including personal injury and defamation.
Our consultation in the autumn would also seek views on
other related recommendations on funding arrangements such as
whether lawyers should be permitted to enter into Damages-Based
Agreements (DBAs) or 'contingency fees' in litigation. DBAs
are also a type of 'no win no fee' agreements which allow a lawyer
to take a percentage of the claimant's damages for taking on the
claim. DBAs are commonly used in Employment Tribunals but are
not permitted in litigation before the courts. This
consultation will take account of any relevant legal aid reform
proposals on which we will also be seeking views in the autumn, as
previously
announced.
Work is also progressing on a number of other areas covered
by Sir Rupert's review, but will not form part of the Government's
consultation in the autumn. The Government is considering the
recommendations on Fixed Recoverable Costs in the Fast Track, and
on referral fees. The Legal Services Board is looking at the
issue of referral fees, and their conclusions will inform the
Government's position. We will also consider Lord Young of
Graffham's conclusions from his "Review of Health and Safety Law
and the Compensation Culture". Separately, the Civil Justice
Council will consult over the summer on a Voluntary Code of Conduct
for third party funders, as recommended by Sir Rupert. Third Party
Funding is an arrangement whereby a party not directly relevant to
the proceedings agrees to fund the case in return for a share of
the damages awarded.
A range of judiciary-led costs and case management work has
been continuing since Sir Rupert's report was published. For
example:
- more robust costs management is being piloted in defamation
cases and in mercantile, technology and construction
cases;
- a streamlined process and scale costs in the Patents County
Court will come into effect in October 2010;
- there will be a pilot of assessing disputed costs under
£25,000 on the papers rather than at a hearing, in Leeds,
Scarborough and York County Courts from October 2010; and
- a pilot to speed up and reduce the costs of expert evidence
(through 'concurrent evidence') started in June 2010 in mercantile,
technology and construction cases at the Manchester Civil Justice
Centre.
A Judicial Steering Group is considering the priorities for
further implementation of these recommendations.
Contacts:
Weightmans will be responding to the
Consultation on its own account but is also keen to assist clients
in formulating their own response individually or collaboratively
with other compensator stakeholders.
Rob Williams – Head of Costs
Howard Dean – Costs Partner
Dan Cutts – Director of Insurance
Andrew Cooper – Director of Public Sector