On 1st April 2013 many of the key provisions of the Jackson Reforms came into force. This article sets out the key areas of change that will affect clinical negligence claims.

ATE Insurance

Under section 46 of LASPO, the costs of ATE insurance premi-ums are no longer recoverable. However, premiums paid to fund expert reports on liability and causation in clinical negli-gence claims remain recoverable (see The Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings Regu-lations 2013). Such premiums will be recoverable where the claim for damages exceeds £1,000.

CFAs and DBAs

Section 44 of LASPO abolishes the recoverability of success fees from defendants where the claimant has entered into a CFA on or after 1st April 2013 (see The Conditional Fee Agree-ments Order 2013). Under the new regime, it is the party fund-ed by a CFA who will have to pay the success fee.

It has been argued that this change will give litigants a financial interest in limiting the costs of their own claim. However, critics are concerned that claimants will be undercompensated, given that they must fund their legal costs from their award of damag-es. To this end, in clinical negligence claims the success fee charged cannot exceed 25% of the claimant’s damages, ex-cluding damages for future care and loss (see The Conditional Fee Agreements Order 2013).

Damages Based Agreements ("DBAs") are also now permissi-ble in civil disputes. Under such agreements, legal fees are calculated as a percentage of the damages awarded to the cli-ent. In personal injury and clinical negligence cases, there is also a cap on payment of 25% of damages (excluding damages for future care and loss).

With regard to both CFAs and DBAs, the caps only apply to hearings at first instance.

Increase in General Damages

Following the judgment of the Court of Appeal in Simmons v Castle [2012] EWCA Civ 1288, there will be a 10% increase in general damages (such as for pain, suffering and loss of ameni-ty), however a claim is funded. The increase applies to cases which settle or where judgment is given after 1 April 2013, un-less there is a funding agreement (such as a CFA) which pre-dates 1 April 2013.

Qualified One Way Costs Shifting ("QOCS")

QOCS has been introduced as a new costs protection regime for claimants, and will be a source of considerable concern for defendants. Under QOCS, whilst a successful claimant can recover costs from a losing defendant, a successful defendant will be unable to recover costs from a losing claimant (subject to the exceptions in CPR 44.15 to 44.16).

The initial concept behind capping success fees and abol-ishing the recoverability of ATE premiums was the Jack-son Report finding that solicitors and insurers had been unduly profiting at the expense of defendants. Jackson LJ stated: "I do not see why either the NHS or medical practi-tioners should bear the costs of investigating allegations against themselves, which are unfounded. That is neither right in principle nor a wise use of NHS resources". How-ever, the introduction of QOCS would appear to be directly contrary to this rationale, meaning that successful defend-ants will often be left to foot their own bill.

Cost Budgeting

All multi-track cases issued from 1st April 2013 will be sub-ject to costs budgeting. Parties will be required to file costs budgets within 28 days of service of the Defence, estimating their total costs in running the claim through to trial (including the fees of solicitors and counsel, court fees, medical records fees and experts’ fees). Any party that fails to file a budget will be treated as having filed a budget containing only the relevant court fees.

If a party is likely to exceed their budget, they must justify it and apply to revise the budget. When the court comes to assessing costs, a party will be held to its budget "unless satisfied that there is a good reason not to." In the recent case of Murray & Anor v Neil Dowlman Architecture Ltd [2013] EWHC 872 (TCC), Coulson J warned that the courts are likely to take a strict view of costs budgets once they are approved, stating that:

"in an ordinary case, it will be extremely difficult to persuade a court that inadequa-cies or mistakes in the preparation of a costs budget, which is then approved by the court, should be subsequently revised or rectified…"

Whilst Murray related to the pre-1st April costs manage-ment pilot in the TCC, the judge said the new CPR was "very similar". Accurate cost budgeting will therefore be-come a crucial part of the new regime.

Master Roberts has written an interesting practice note on this issue. He raises concerns as to how the High Court will be able to deal with the cost management changes, and states that Masters Roberts and Cook would become "overloaded", thereby leading to ‘unacceptable delays’.

The practice note states that the High Court’s clinical negli-gence group has agreed that masters will consider ordering that parties do not exchange costs budgets for at least six months. This direction will apply to moderately severe or very severe brain damage or injuries involving paralysis.