Progress report
Date: 20 January 2012
Authors: Dominic Regan
Issue: Vol 162, Issue 7497
Categories: Opinion, Legal aid, Legal services
While Lord Justice Jackson remains hopeful that the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (as it will be) will be enacted on 1 October 2012, there are signs of slippage, albeit slight. Much has yet to be done and civil servants are muttering about the changes coming into play in early 2013.
The fundamental reforms are the ending of recoverability of additional liabilities, the legitimisation of damages-based agreements in litigation (aka contingency fees), an enhanced Pt 36 reward scheme and the banning of referral fees.
A worrying read
The House of Commons Transport Select Committee report on the cost of road traffic accident (RTA) insurance was published earlier this month. RTA insurance is mandatory and so affects all drivers. Concern about rising premiums caused the government to decide that a ban upon referral fees was a necessity, a fundamental policy shift. The committee report makes worrying reading for RTA claimant practitioners. It urges that prompt regulation be implemented. It also suggests that the current costs regime created under the RTA portal ought to be reviewed on the ground that it is over-generous. The minister has confirmed that this is, indeed, under consideration.
It is argued that a ban on referral fees means that the cost of processing claims can be reduced and a significant cut, perhaps of 50%, be imposed. This is unduly simplistic for it assumes that work will go to solicitors without them doing anything at all. If those who secure work by paying fees are banned from doing so then they will obviously have to explore other channels, by way of advertising and marketing, which will have a cost attached.
Solitary confinement
Some rightly ask why a ban on referral fees should be confined to injury work? If the perceived mischief is the selling of claims, then ought not all such transactions be dealt with in the same way?
Still to be tackled is legal aid reform. This has been parked up until next year. Lord Justice Jackson is, in my view, utterly right to argue against the removal of legal aid in clinical negligence work. There are less dramatic reforms and a costs management pilot would be a key reform to suppress expenditure seen to be wasteful.
The great uncertainty is qualified one-way costs shifting. How will it work, assuming it works at all? Privately, civil servants involved admit that they do not have a clue. Reconciliation of Pt 36 and a regime where a losing claimant would not ordinarily be liable for costs is but one blatant source of difficulty.
A revised Pt 36 rewards regime is coming and this will give claimants a greater incentive to make sensible offers. If the claimant ends up at trial having made a good offer, they will see their damages enhanced by 10% on awards of up to £500,000. This in turn will put greater pressure upon defendants to settle.
Alternate reforms
Other reforms, contrary to the views of Sir Rupert, are envisaged. The threshold for the RTA portal, presently £10,000, is destined to rise to £25,000. This is not as dramatic as it appears for two reasons. The first is that not many cases fall within the enhanced bracket and the second is that, as quantum increases, it is more likely that disputes will exit the portal on account of complexity.
New portals may be far off but they will come, as recommended by Lord Young in 2010. Portals for both employer’s liability and occupier’s liability seem certain.
The non-injury small claims limit is at present £5,000, a limit which Jackson considers correct. Not so the government, which has serious intentions to double it to £10,000, thereby provoking a significant increase in the number of litigants in person.
Fixed-costs are a certainty for fast-track claims, and again there is a real likelihood that the track ceiling will be nudged up to £35,000 or £40,000. In the long term, active costs management will be the norm for all multi-track work.
A more stringent proportionality test is coming. The lengthy checklist set out in CPR 3.9, as to dealing with applications for relief from default, is to be slashed and we may even see Pt 36 rewritten.
The key changes are certain. The reform bill has been given the highest priority by Parliament and the Royal Assent might be but three months away. One can confidently assume that next year, at the latest, the shape of litigation will be drastically reformed.
Professor Dominic Regan, professor at City Law School & NLJ columnist has assisted Lord Justice Jackson & His Honour Judge Simon Brown QC with costs reform.
E-mail: krug79@gmail.com Website: www.profdominicregan.blogspot.com
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