A brave old world?

In the few weeks since publication of Sir Rupert Jackson’s final report last month, the most talked about of his recommendations has been the proposal to abolish the ability to recover success fees and after the event (ATE) insurance premiums from the losing party. The reactions have ranged from outraged cries that access to justice will be stifled, through a broad welcome from those who have to pay them now, to the ostrich-like assumption that the primary legislation needed will never happen.

Deliverable?

Two observations by Sir Rupert in the final report lead me to believe that it will happen and that parliamentary time could be found relatively soon. First of all, there is no doubt that he regards conditional fee agreements (CFAs) and ATE insurance as the chief culprits: “CFAs… have been the major contributor to disproportionate costs in civil litigation in England and Wales.” (Final Report p 16)

Second, it is clear from the chapter on clinical negligence claims that he was very concerned about the effect of CFAs and ATE on the public purse: “…this huge area of public expenditure must be kept under proper control, so that the resources of the health service are not being squandered unnecessarily on litigation costs.” (ch 23, p 232) The proper use of NHS resources will undoubtedly be an election issue and one on which both main parties will be looking for opportunities to cut expenditure without reducing services.

Access to justice

Sir Rupert has always made it plain that enabling or maintaining access to the civil courts system has been the one term of reference to which he should have regard above all others. His recommendation that success fees and premiums should cease to be recoverable is therefore balanced by looking at other ways of protecting claimants who clearly could not afford to risk the exposure to opponents’ costs. The principal alternative adopted is that of “qualified one way costs shifting”, where the winning claimant will normally recover their costs and the losing defendant will normally not recover theirs.

The “qualified” aspect lies in the need to control behaviour (including maintaining the benefits of Pt 36 as a means of settling claims) and to address those occasional cases where the claimant has substantial means and the defendant does not. On the latter point the recommendation is to adopt a test similar to the one used for claims against the Legal Aid fund.

The conduct point is not developed in more detail. Those who see this as a recipe for satellite litigation should bear in mind that the final report is a concept, not a set of detailed and finely drafted court rules. It will be relatively easy to design a set of principles which would ensure that the conduct point is not misused.

Brave old world

The landscape that Sir Rupert paints is, in many ways, a return to the one we saw in the early days of CFAs, before April 2000. Success fees and ATE premiums were not recoverable then: claimants paid success fees out of their damages, capped at 25% of damages, and broadly seemed content to do so. Claimants did also pay ATE premiums, but in personal injury claims at least these were at low levels, such that the 25% cap probably swept up the premium as well in many cases.

The only cause for concern was that success fees were set at levels higher than might have been expected (see, for example, 1997 research by Stella Yarrow, The Price of Success), but this was attributed to lack of familiarity with a new regime. Solicitors now have 15 years’ experience of running CFAs and assessing risk factors.

What if...?

There is, of course, no guarantee that abolition will happen either at all or quickly enough to deliver early benefits. Sir Rupert has outlined in Chapters 9 and 10 some alternative measures to control costs, which could be implemented rather more easily, if his primary recommendation is not accepted.

So for example with ATE, there should be an “amnesty period”, a limited window in which the defendant could avoid liability for any premium by admitting liability (see the new CPR r 44.12B which introduced this concept for publication proceedings). Recoverable premiums could be capped; the premium for certain risks (such as Pt 36) could be regarded as non-recoverable. These could be achieved by rule change or even by judicial decision.

Similarly with success fees, Sir Rupert advocates rigorous control as the alternative. Rule changes would include having no recoverable success fee during the relevant protocol period or for Pt 36 risks, plus removing the more anomalous decisions around fixed success fees such as Lamont v Burton [2007] EWCA Civ 429 and Kilby v Gawith [2008] EWCA Civ 812.

Balance

Like all of the recommendations in the final report, there is an elegant balance to the package of reforms that would accompany abolition, such that it is difficult to argue cogently against the proposal. As with the other recommendations, this is firmly data led and carefully thought through, seeking out the balance of the public interest from the many cries of vested interests.

Andrew Parker is head of strategic litigation at Beachcroft LLP & is one of Lord Justice Jackson’s assessors.

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