The stated aim in the Government's response to Lord Justice Jackson's Civil Litigation Costs Review (brief details of which can be found here) is to ensure that meritorious claims will be resolved at more proportionate cost, while deterring unnecessary or avoidable claims from progressing to court. In order to achieve that aim, the Government will implement the primary recommendations of LJ Jackson's review and a package of associated measures again as set out by LJ Jackson. In brief, the reforms to be implemented are as follows:
- The recoverability of a conditional fee agreement (CFA) success fee from the losing side is to be abolished. In future any CFA success fee will be paid by the CFA funded party rather than the other side.
- The recoverability of an after the event (ATE) insurance premium from the losing side is to be abolished. In future any ATE insurance premium will be paid by the insured party rather than the other side.
- In personal injury (PI) cases there will be a cap on the amount of damages that may be taken as a success fee. The cap will be set at 25% of damages (other than those for future care and loss).
- In non-PI cases, the maximum success fee that can be agreed with a client under a CFA will remain at 100% of base costs.
- The recoverability of the self-insurance element by membership organisations, equivalent to the ATE insurance premium, will also be abolished.
- In clinical negligence cases recoverability of the ATE insurance premiums to cover the cost of expert reports will be allowed. The details will be set out in regulations to be drafted.
- There will be an increase of 10% in non-pecuniary general damages (such as pain, suffering and loss of amenity) in tort cases for all claimants.
- A regime of qualified one-way costs shifting will be introduced for personal injury cases including clinical negligence. This means that an individual claimant is not at risk of paying the defendant's costs should the claim fail (except in limited circumstances), but the defendant would have to pay the individual claimant's costs should the claim succeed. The exceptions will be (1) where the claimant has acted fraudulently, frivolously or unreasonably in pursuing the litigation - a reasonable claimant will not be at risk of paying the other side's costs on behavioural grounds, (2) on financial means grounds - only the very wealthy would be at risk of paying any costs. The normal costs shifting rules will continue to apply in other cases.
- Part 36 of the Civil Procedure Rules will be amended to equalise the incentives between claimants and defendants to make/accept reasonable offers. This will apply to all civil cases. It will be made clear in the changes that will be implemented, that where a money offer is beaten at trial - by however small a margin - the costs sanctions applicable under Part 36 will apply. An additional sanction equivalent to 10% of the value of the claim will be introduced to be paid by a defendant who does not accept a claimant's reasonable offer that is not beaten at trial.
- Damages-based agreements (DBAs) or contingency fees will be allowed in civil litigation. Successful claimants will recover their base costs (lawyer's hourly rate fee and disbursements) from defendants and the costs recovered from the losing party would be set off against the DBA fee, reducing the amount payable by the claimant to any shortfall between the costs recovered and the DBA fee. DBAs will be subject to similar requirements for parties to the agreement as for CFAs so, for example, the amount of payment lawyers can take from damages in PI cases will be capped at 25% of damages (excluding for future care and loss).
- A new test of proportionality in costs assessment will be introduced to ensure that, in appropriate cases, costs are controlled where they are being incurred in a way that is disproportionate to the value, complexity and importance of the claim.
- The prescribed rates which successful litigants in person may recover from a losing opponent will increase in line with inflation since they were set.
Changes to the CFA regime will require primary legislation whilst other changes will require changes to the Civil Procedure Rules or other secondary legislation. It is envisaged that there may need to be further consultation on some of the areas to be implemented but that the reforms will be implemented together once the legislation is enacted.
There is no indication from the report as to a timescale for the legislation to be enacted.