The full package?
Date: 01 April 2011
Authors: David Greene
Issue: Vol 161, Issue 7459
Categories: Opinion, Costs
The Jackson reforms roll on with further endorsement from the government by publication of its response to the consultation on proposed changes to the civil costs regime.
The lord chancellor issued a statement to Parliament and a full response document on Tuesday. At the same time, he published a further consultation document on providing a simpler process in the county courts with particular emphasis on the use of mediation to resolve disputes.
Many were surprised by the speed at which the government responded to the consultation which only closed on 14 February. It received over 600 responses. It is said that each was considered in preparing the response.
Purpose
At first glance, one wonders what the purpose of the consultation was. The response records that in many instances a substantial majority were opposed to alteration, for instance, of the recovery of the success fee on a CFA, but the government appears to have ignored that majority. Similarly, with the recovery of the ATE premium, a substantial majority of respondents (69%) said that there should be no change from the current system.
Notwithstanding these responses the government has not changed its proposals in any significant way from those proffered for consultation.
Thus we see the proposals in the response as follows:
- Abolition of the general recoverability of the CFA success fee from the paying party.
- The recoverability of the premium for ATE insurance is to be abolished save cover for expert reports in clinical negligence cases.
- General damages are to be increased by 10% for all claimants.
- In personal injury cases there will be a cap of 25% of the damages (other than those for future care and loss) that may be taken as a success fee.
- The success fee maximum is retained at 100% of base costs subject to the 25% cap in personal injury cases as above.
- A regime of qualified one-way cost shifting will be introduced for personal injury cases including clinical negligence.
- Part 36 will be amended to remove the doubts as to the award of costs where an offer is beaten, introduced by the decision in Carver. Effectively this will confirm the decision in Gibbon. In addition, it is proposed to have further sanction against defendants for failure to accept a claimant’s offer that is not beaten at trial. The government is also looking at introducing some certainty on the assessment of other remedies and whether they are beaten by a Pt 36 offer.
- Damage based agreements will be made lawful. These are effectively US style contingency agreements with lawyers taking a percentage of the damages awarded.
- There will be a new test of proportionality in costs assessment, as proposed by Jackson. This has been a much criticised element of the proposals because of the uncertainty it produces for costs assessment with the application of proportionality after the event. The majority of respondents were opposed to the changes but the government proposes to introduce them in any event.
- The government is proposing to raise the amount of recoverable costs by litigants in person in line with inflation.
With some exceptions, this is the full Jackson package. It is indeed an immense achievement that what started as an internal review within the judiciary has converted into a clear political platform for a change to the civil costs regime.
Absence
The one substantial absence from the consultation paper and the response, is the recommendation of Jackson on referral fees. At the press briefing the minister suggested that the government is waiting to see what happens with the introduction of ABS’s before considering referral fees. Referral fees are under review by the Legal Services Board but the government seems minded that ABS’s are likely to change the business of legal services substantially within those areas where referral fees are an important aspect. The wait and see policy looks long term. It will be some time before we see the impact of ABS’s and the way in which, for instance, claims management companies organise their business in response.
In addition to responding to the Jackson consultation, the government has produced a consultation on reforming process in the county courts. For many practitioners the most important point that may come out of the consultation is the raising of the limit of both the small claims track and the fast track. The one bright star coming out of the county court consultation is the possibility of reform of the enforcement process. Long criticised and outdated, many solicitors will welcome a review of the process and the relevant legislation. The consultation ends on 30 June 2011. We are told that legal aid proposals are going to be published with a draft bill before the Easter recess.
The fight begins
Will this all become law? It is certainly moving that way but there is yet much to fight for in the parliamentary process. Ken Clarke is not the most popular minister on the Tory benches but he loves a fight.
David Greene, partner, Edwin Coe LLP & consultant editor of New Law Journal. E-mail: David.Greene@EdwinCoe.com
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