The much awaited report on Civil Litigation costs was delivered by Lord Justice Jackson on 14 January 2010. It runs to some 584 pages. It also extensively cross references the interim report which was over 600 pages long. His task was to “make recommendations in order to promote access to justice at proportionate cost”.
The report deals extensively with personal injury litigation, although the intention is that the reforms will apply across the board in the longer term. The main recommendations are:
- The abolition of the indemnity principle, whereby the client must have a contractual liability to pay their solicitor’s costs, otherwise there is nothing for the third party to “indemnify”.
- The abolition of recovery of success fees and ATE premiums. General damages would increase by 10%. Solicitors would be permitted to agree with their clients to take the success fee from damages instead, although this would be capped at 25% of the injury element of the damages.
- Solicitors should not be allowed to pay referral fees in respect of personal injury cases.
- Qualified one way costs shifting. Where the Claimant, if he has acted reasonably, will not be required to pay the Defendant’s costs even if the claim is unsuccessful, but the Defendant will have to pay the Claimant’s costs if the claim is successful.
- Fixed costs for fast track personal injury claims – these will be fixed for certain types of cases and in other cases there will be a financial limit on recoverable costs set at £12,000 for pre-trial costs.
- A Costs Council will be set up to undertake the role of reviewing fast track fixed costs
- Solicitors will be permitted to enter into contingency fee agreements with clients in contentious claims. However, the unsuccessful party, if liable for costs, would only have to pay costs reflecting a conventional amount i.e. they would not have to pay the “success fee”.
A working party will consider general damages for pain suffering and loss of amenity with a view to fixing graduated levels of damages.
- Part 36 offers. Where a Claimant makes an offer to settle to the Defendant which is not accepted, and the Claimant is awarded more at trial, the Claimant’s damages will be enhanced by 10%.
It would appear Lord Justice Jackson wishes to make Claimants more responsible for their own litigation costs. Under the present regime, in the vast majority of cases funded by a Conditional Fee Agreement, it costs him nothing if the claim is successful as he receives 100% of his damages. It also costs him nothing if the claim is unsuccessful, as the solicitor cannot claim any costs under the Conditional Fee Agreement and often has an ATE insurance policy meet any costs payable to the third party. Without a financial interest in the costs the perception is that some Claimants may not act as reasonably and proportionately as they should.
There is much more to ponder in the report. What is certain, if his proposals are followed, is there will be a major shift in the way personal injury litigation is carried out. However, the reforms are so extensive that it will take a considerable amount of time for them to be implemented. The reforms are presented as a “coherent package of interlocking reforms”, but some will require primary legislation not just committee rule change. One has to wonder whether there is presently the political will or the time to implement the proposed changes across the board. We shall to wait to see whether, in fact, what happens is that only some of the proposals are implemented on a piecemeal basis and the desired coherence is lost.