Impact on the Jackson Reforms on Defendants
Reform of civil litigation funding has been well overdue. The proposed reforms, as outlined by Lord Justice Jackson, have however been the criticism of many Claimant’s solicitors. Despite their protests, the Government have announced their intention to press ahead with the majority. In their response to Lord Jackson’s suggestions, the Government acknowledges that it cannot be right that ‘regardless of the extreme weakness of a claim, the sensible thing for the Defendant to do is to settle, and to get out before the legal costs start running up’.
Two significant changes that will be implemented are that Conditional Fee Agreement (‘CFA’) success fees and After the Event (‘ATE’) event insurance premiums will be largely irrecoverable.
Considering the changes from a Defendant’s point of view:
- The winning party will no longer be able to recover a CFA success fee from the losing party. It will be paid by the CFAfunded party.
- There will be a cap on the amount that may be taken as a success fee. It will be set at 25% of the damages recovered (other than those for future care and loss).
- The maximum success fee will remain at 100%. l The Government intend to have a tightly drawn power to allow recoverability of ATE insurance premiums, to cover the cost of expert reports only in clinical negligence cases. No other ATE insurance premiums will be recoverable, including the selfinsurance element by membership organisations.
- There will be an increase of 10% in general damages (pain, suffering and loss of amenity) for all Claimants.
- A regime of "Qualified One Way Costs Shifting" will be introduced whereby an individual Claimant is not at risk of paying the Defendant’s costs should the claim fail (except in limited prescribed circumstances), but a Defendant would have to pay the individual Claimant’s costs should the claim succeed. The exceptions will be on behavioural or financial grounds but it is not anticipated that this will be successfully implemented on a frequent basis. It may yet transpire that it will not be commercially sensible to defend many low value claims.
- The rule in Carver v BAA is being reversed: The rules on Part 36 are to be amended to equalise the incentives between Claimants and Defendants to make and accept reasonable offers. An additional sanction equivalent to 10% of the value of the claim will be introduced, to be paid by Defendants who do not accept a Claimant’s reasonable offer that is not beaten at trial.
- Damagesbased agreements (DBAs otherwise known as contingency fees) will be allowed in civil litigation.
- The prescribed rates which successful litigants in person may recover from losing opponents will increase in line with inflation.
A new test of proportionality will be introduced in cost assessments. This will mean that only reasonable and proportionate costs may be recovered from the losing party. It remains to be seen how this will be framed and how it will work in practice.
All of the above proposals have not yet been implemented and will require primary legislation and changes to secondary legislation and the Civil Procedure Rules. The aim, which looks promising from a Defendant’s perspective, is to restore a fair balance to the system.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.