It is clear following the Government’s announcement yesterday there is to be root and branch reform of civil justice. The Government’s stated ambition is to resolve disputes by working problems through in a non-adversarial manner. In his statement yesterday, Ken Clarke said that the Government will bring forward legislation as soon as parliamentary time allows and is planning to go ahead with:

  • Abolishing recoverability of success fees and associated costs in “no win no fee” conditional fee agreements.
  • Allowing damages-based agreements in litigation before the courts.
  • Introducing a 10% increase in general damages and introducing a mechanism to protect the vast majority of personal injury claimants from paying a winning defendant's costs (through qualified one way costs shifting).
  • Other measures including:
    • encouraging parties to make and accept reasonable offers.
    • introducing a new test to ensure that overall costs are proportionate.
    • increasing the costs which can be recovered by people who win their cases without representation by lawyers.

We are sure that you have already been inundated with various updates from other firms and companies, together with press releases, about the Government’s planned proposals. We, therefore, do not intend to reiterate those proposals. Rather, we focus here on the Ministry of Justice’s fresh Consultation Paper – Solving Disputes in the County Courts. The closing date for responses is 30 June 2011.

The consultation paper suggests a new vision for civil justice, based around the following principles:

  • Proportionality
  • Personal responsibility
  • Streamline procedures
  • Transparency

What aspects of the new consultation process may impact upon your business?

An Extension of the RTA Personal Injury Scheme

The Government is of the view that the scheme has continuing support from both claimant and defendant representative groups, who maintain a collaborative approach to making it work. The RTA Personal Injury Process is more detailed than any Pre-Action Protocol and the proposals are to extend the financial limit of £10,000 to (i) £25,000 or (ii) £50,000 or (iii) some other figure.

If this occurs, representations are sought on whether the fixed costs regime shall remain the same if the limits are raised. It is important to note that such extension would not require primary legislation and could be introduced by extending the existing protocols or introducing new ones.

EL and PL Claims

The consultation paper recognises that EL/PL claims can be more complex than RTA claims. However, the Government “now believes the time is right to expand a similar system to the RTA Personal Injury Scheme to EL/PL claims”.

The papers seek responses on the following pertinent questions:

  • Question 6 – Do you agree that a variation of the RTA Personal Injury Scheme should be introduced for employers and public liability personal injury claims? If not, please explain why.
  • Question 7 – If your answer to question 6 is yes, should the limit for that scheme be set at (i) £10,000 (ii) £25,000 (iii) £50,000 or (iv) some other figure (please state with reasons)?
  • Question 8 – What modifications, if any, do you consider would be necessary for the process to accommodate employers and public liability claims?

This will clearly need a detailed response from those dealing with non-RTA claims. The RTA portal, for example, does not deal with liability disputes and is restricted to contributory negligence for lack of seat belt. EL/PL claims often involve liability disputes particularly in construction claims where there are likely to be a number of potential defendants.

Clinical negligence

It is proposed that low value clinical negligence claims are to be included in the variation to the RTA Personal Injury Scheme and indeed, the NHSLA has set up a pilot to assess this. Questions 9-10 of the consultation paper relate to these proposals.

Fixed recoverable costs

If the RTA scheme is extended (by value, type of claim or both) then the Government would expect a significant proportion of claims to be covered by fixed costs.

In particular, it is envisaged that the matrix of fixed costs similar to that developed by Jackson LJ would be implemented. In short, Jackson LJ concluded that fixed costs should apply across all categories of personal injury (RTA, EL and PL) and proposed two charts of costs; one of which incorporates an allowance for early admission of liability. That having been said, the Government states:

“We appreciate that further work would need to be done on the figures to be included in the matrix”.

Questions 12-15 of the consultation paper seek views on whether the system of fixed recoverable costs proposed by Jackson LJ should be implemented for all fast track personal injury claims not covered by an extension of the RTA Personal Injury Process. Responses are sought on whether, for all other fast track claims, there should be a limit to pre-trial costs that may be recovered. For example, Jackson LJ, in his final report, suggested an overall limit of reasonable costs in all cases up to trial of £12,000.

Mediation in higher value claims (fast and multi track)

For cases up to a value of £100,000, the Government proposes an introduction of compulsory mediation information or assessment sessions. This is likely to be at allocation and replace the current process, which allows parties to request a stay for settlement, with sanctions for failure to do so.

Other matters that the consultation seeks responses on include (but are not limited to):

  • Mandatory pre-actions for money claims under £100,000 in the County Court.
  • Increasing the small claims track to £5,000 or indeed £15,000 or some other figure (but this would exclude personal injury claims).
  • If the small claims track limit is increased, then there should be a similar increase in fast track limits. If so to what level? £25,000 - £35,000 has been suggested, but the Government seeks views on the appropriate threshold.
  • A consideration of ADR and whether the Civil Mediation Counsel Accreditation Scheme is sufficient. Is more regulation required?
  • Small claims mediation - a proposal for automatic referral.
  • Rationalisation of jurisdiction of civil courts and the creation of a single County Court for England and Wales.

As before, impact assessments are appended to the consultation paper for various categories of responses.

Careful consideration of the consultation is required and we are committed in our continued efforts to influence the Government’s views on civil litigation reform. As with our response to the Government on Jackson LJ’s recommendations, we aim to produce a response that reflects the industry’s requirements as we shape the litigation landscape for 2012 (and beyond).