Today saw the publication of the interim report in Lord Justice Jackson's year-long review of English civil litigation costs. Weighing in at over 600 pages plus appendices, and with 64 chapters, it is a substantial piece of work.

A full copy of the interim report is available on the Judiciary website.

Background

Lord Justice Jackson was appointed by the Master of the Rolls, Sir Anthony Clarke, to lead this fundamental review of the rules and principles governing the costs of civil litigation. His objective is to make recommendations "in order to promote access to justice at proportionate cost".

Promoted to the Court of Appeal in October, Lord Justice Jackson was formerly the judge in charge of the Technology and Construction Court. His review commenced in January and a final report is expected by the end of 2009. It will be for the Ministry of Justice to accept or reject any recommendations.

From now until the end of July, Lord Justice Jackson will be conducting a public consultation on the issues identified in his report. This will include a series of public seminars held in Birmingham, Cardiff, Manchester and London. Lord Justice Jackson will also be speaking about his proposals at an event at Herbert Smith's offices on 10 June.

The report

Lord Justice Jackson emphasises that this is a preliminary report which is intended to provide a basis for discussion during the consultation period, and that he will not make up his mind about the issues identified in the report until the end of the consultation.

Accordingly, for the most part, the report identifies the issues and options on which views are sought, rather than setting out Lord Justice Jackson's own views. The report asks readers to submit comments on the issues raised in the report by 31 July.

Key points from the consultation which could affect the conduct of major commercial litigation include the following:

  • Court fees: Lord Justice Jackson expresses disagreement with the Ministry of Justice's current policy of "full-cost pricing" (whereby litigants pay for the court service they receive). He suggests that it is wrong in principle that the entire cost or most of the cost of the civil justice system should be shifted from taxpayers to litigants.
  • Commercial Court: Lord Justice Jackson states that recommendations in his final report must encompass all civil courts, including the Commercial Court, but recognises that "one size does not fit all". For example, he states that his "distinct impression" from the submissions and discussions to date is that in major high value litigation (Commercial, Chancery, Mercantile, construction, etc) court users generally wish to maintain the present regime of recoverable costs being at large. He says that if this impression is confirmed during the consultation process, then it would be inappropriate to introduce any form of fixed costs or similar into the realm of high value business litigation.
  • Cost shifting: Lord Justice Jackson invites views as to whether there are any specific areas where cost shifting (or recovery of costs) should be abolished, though he expresses the "tentative conclusion" that it must remain in some form for the generality of litigation.
  • Collective actions: He suggests that the abolition of costs shifting in the context of collective actions "merits serious consideration". He comments, however, that proper incentives would have to be built into the rules to deter the commencement of unmeritorious collective actions.
  • Non-recovery of costs by defendants: He invites views as to whether there should be a presumption of "one way" cost shifting, whereby the claimant could recover its costs but not the defendant, in any types of claim. He expresses the view that this should be seriously considered in personal injury litigation.
  • Alternatives to "loser pays": The report proposes consideration of alternative forms of cost shifting, which are more directly based on encouraging early resolution of claims. For example, there might be no presumption that costs would be ordered, but the court would have jurisdiction to award costs based on the conduct of the parties, in particular whether reasonable attempts have been made to settle the proceedings.
  • Costs protection for individual litigants: Lord Justice Jackson invites views as to whether the rules should introduce some form of cost protection in favour of individual (as opposed to corporate) litigants. Costs orders against individual claimants (and perhaps also defendants) would be strictly regulated, for example according to the individual's means or the size and nature of the claim.
  • Conditional fee agreements (CFAs): Currently, a successful party can recover from its opponent the success fee, or uplift on the solicitor's basic costs (which cannot be more than 100%), payable under a CFA and also the premium taken out to cover potential liability for an opponent's costs (known as "after the event" or ATE insurance). Lord Justice Jackson invites views as to the appropriateness of the levels of success fees and ATE premiums currently set in different types of litigation, and whether these should continue to be recoverable.
  • Contingency fees: He also invites views as to whether contingency fees (whereby a lawyer is remunerated by way of a share in the client's damages) should be permitted and, if so, whether the losing party should pay costs on a conventional basis or should also be liable for the contingent element of the fee.
  • Costs management: Lord Justice Jackson puts forward various proposals for enhanced "costs management" by the courts, for example requiring parties to file detailed costs estimates or budgets at regular intervals and providing for the court to make various types of cost management order. He states however that from all the indications he has received to date, it seems that costs management would have no place in the general run of cases in the Commercial Court.
  • Summary assessment of costs: The report sets out various options, including replacing summary assessment with provisions encouraging judges to order an interim payment on account of costs, or alternatively provisional assessment of costs which would then become final unless either party applied for detailed assessment.
  • Part 36 offers: He suggests that serious consideration be given to a rule change to reverse the Court of Appeal's decision in BAA v Carver [2008] EWCA Civ 412 (which allowed a wider interpretation of whether a judgment in favour of a claimant is "more advantageous" than a defendant's Part 36 offer) as it introduces an unwelcome degree of uncertainty into the Part 36 process and puts unreasonable pressure on claimants to accept offers which are not quite high enough.
  • Electronic disclosure: Lord Justice Jackson identifies some methods by which the costs of e-disclosure might be controlled, for example by parties paying greater heed to the current provisions for early discussion of issues that might arise and agreement in respect of keyword searches to be used. He asks for feedback on whether any particular approach to e-disclosure has saved (or conversely, wasted) costs in particular cases.
  • Disclosure generally: He puts forward wide-ranging options for reform including: making no change to the current disclosure rules; limiting disclosure to the documents on which a party relies (with the ability to seek specific disclosure of further documents); and reverting to the old "train of enquiry" test.
  • Disclosure assessors: He comments that one option that merits consideration for "heavy" cases only is the use of disclosure assessors, who would be experienced lawyers appointed to assist the court in relation to disclosure.
  • Witness statements: The report identifies various potential options to reduce the costs associated with witness statements, including imposing costs sanctions for irrelevant evidence, making witness summaries the norm rather than detailed witness statements, confining witness statements to matters that are not within the documents, and stipulating a maximum length for statements.
  • Expert reports: The report makes a number of proposals, including for sequential exchange of expert evidence on liability as standard and a presumption that quantum experts be instructed on a "single joint" basis.
  • Pre-action protocols: Lord Justice Jackson says that there is a need for a "radical re-think" due to a concern that some of the protocols generate more costs than they save. He sets out a number of points for consideration, including whether the protocols should be made simpler or less onerous, whether some steps can be deferred until post-issue and whether there should be more effective sanctions for non-compliance.
  • Docket system for judges: Lord Justice Jackson recommends that a docketing system should be introduced for civil litigation, whereby cases would be assigned to a single judge (or a team of judge and specified master / district judge).
  • Trial: The report sets out various options for addressing the costs associated with the trial, including increased judicial control of the evidence and/or timetable, and submission of written openings in advance of trial with no duplication in oral openings, or alternatively a cap on the length of written openings.  

Comment

As will be clear from the above, Lord Justice Jackson's report deals with fundamental issues and, if some of the more radical ideas and options are implemented, this will have a dramatic impact on the future of commercial litigation in England and Wales.

It will clearly be important for all court users to engage in the consultation process. We will shortly be publishing a more detailed bulletin with further analysis of Lord Justice Jackson's report, and will be liaising with clients over the coming months.