The Government recently confirmed that it intends to implement most of the plans to reduce civil litigation costs highlighted during its consultation at the end of last year. As a result, the draft Bill addressing these changes was issued in June. Here we look at the main proposals and their impact.

Lord Jackson published his long awaited report on changes to the civil litigation system in January 2010, following a detailed review of civil litigation costs. Wide ranging recommendations were made and the Government led a consultation in November 2010 entitled ‘Proposals for Reform of Civil Litigation Funding and Costs in England and Wales’ with a view to enacting those recommendations.

The Government intends to abolish the recoverability of success fees in ‘no win no fee’ conditional fee agreements (CFAs). Under the current regime, defendants must pay these additional costs if they lose. Instead, claimants will have to pay their lawyer’s success fee out of their damages.  

At present, damages awards allow the injured individual to use those monies to ensure any current and future needs are met. If a percentage is deducted for fees, it may mean that person does not have the necessary level of damages to cover their ongoing requirements.  

CFAs were introduced by the Government particularly for this area of litigation so that lawyers would accept the risks and take on a range of cases. The winning claims would cover the costs of the losing ones. The system enables access to justice for claimants but encourages good risk assessment and avoids claims without merit being pursued. Lawyers are paid nothing on unsuccessful cases and often do not recover all their costs even in successful ones.

The new proposals are likely to limit access to justice as the return on winning cases will be capped. The net effect of this will be that solicitors will only take on strong cases as they cannot carry the risks with difficult cases. There are many claims which are valid but difficult to prove or strongly contested due to their high value. With high risk and only a moderate reward if successful, solicitors may simply have to turn these cases away.

This is likely to lead to those with straightforward cases and minor injuries being compensated with minimum impact from a fees perspective and those like the paraplegic child with lifelong needs and a difficult claim at best having to pay legal costs out of their damages which are needed to protect their future. At worst they will be left without any recourse.  

There are also issues about future funding of disbursements by claimants (for example court and experts’ fees) and risks of being liable for a defendant’s legal costs that are currently avoided by the existing provision for insurance to protect against these risks.

Although the Government believes that introducing a 10% increase in general damages for injury may address the above problems in respect of any claimant’s responsibility for costs, it seems unlikely that this will answer the concerns effectively.  

Many people fear that these plans will restrict access to justice and therefore compensation and funding for treatment and rehabilitation for those with serious injuries and difficult but genuine claims.

It is a major concern for those working in this area who see at first hand what a difference compensation can make to ensuring effective rehabilitation and enabling people to rebuild their lives. These recommendations may reduce the number of people who will have this option even where they have valid but difficult claims.  

There is widespread apprehension that the proposals focus on cost saving for the Government and the insurance industry, while impeding many who find their lives turned upside down by the negligence of a third party.