New Costs Recommendations

You may have heard about the review of civil litigation costs by Lord Justice Jackson on the news. His recommendations for change in the system are set to be the most significant reforms for over a decade. Whilst he suggests change for the whole of the civil system – including Judicial Review, commercial claims and defamation to name a few, the changes will be most felt in the world of personal injury.

It was over 10 years ago when the concept of the Conditional Fee Agreement – “No win, no fee agreements” was first introduced and legal aid for personal injury claims was essentially no longer available. These historic reforms were put forward by Lord Woolf, and had largely been accepted as being geared towards ensuring that a Claimant received proper compensation. This is even acknowledged by Lord Justice Jackson within his report. However, much of the Access to Justice Act 1999, which enacted Lord Woolf’s recommendations, will now need to be repealed if Jackson gets his way. This must leave the question – Will there still be sufficient access to justice for claimants if Lord Justice Jackson’s recommendations are brought about?

The main recommendations Lord Justice Jackson makes are as follows:

1. The ‘success fee’ which applies to no win no fee agreements will no longer be payable by the unsuccessful defendant. Historically, under the no win no fee system, lawyers had been encouraged to take on the risk of cases which may be unsuccessful by charging the opponent a success fee if the claim was successful. This was supposed to set the balance between the cases which lawyers took which were unsuccessful meaning that the lawyer was not paid at all, and cases which were successful where the lawyer could charge up to 100% extra (if the case was particularly risky and complex). Jackson suggests that the extra amount should not be paid by the unsuccessful Defendant but from the victim of the personal injury, through a percentage of their compensation. To assist with this he suggests that the victim’s compensation for their injury should be increased by 10%. It is not yet known whether this increase will be sufficient to cover the victim who now must pay the success fee which may be up to 25%.
2. The ‘After the Event’ insurance premium will also no longer be payable by a losing defendant. Claimant’s have historically been advised to take out such insurance to protect themselves in the event that their claim is unsuccessful and they find themselves liable to pay the Defendant’s costs. This will essentially see an end to such insurance policies.
3. Jackson has introduced the concept of ‘one way costs shifting’. Previously, the costs of the winner of litigation have been paid by the loser. Jackson would abolish this principle so that if a victim of personal injury is successful in bringing a claim against a Defendant, their costs will be met by the Defendant (except any success fee, as set out above). On the other hand, if the victim is not successful in proving his case, he will not have to pay the Defendant’s legal costs, provided that he was reasonable and justified in bringing his claim. Jackson believes that if this recommendation is used, there will no longer be any need for the ‘after the event’ insurance. This may lead to substantial litigation in respect of the costs of a victim who is not successful in bringing claim and whom the Defendant argues was unreasonable in bringing that claim in the first place. A Defendant who manages to successfully defend a claim will be out of pocket as he will no longer have his costs paid by the Claimant. However, if he loses his case and must pay the Claimant’s costs, he will be out of pocket a little less since he will no longer have to pay the success fee or ATE premium.
4. Jackson suggests that there should be a blanket ban on ‘referral fees’ which should mean an end to ‘claims handlers’ such as those we see advertising on television. Claims handlers are those people who advertise no win no fee agreements for personal injury victims and then refer those victims on to firms of solicitors who pay handsomely for the referral. Many large firms simply buy much of their work in. It does not matter which firm is best equipped to deal with any specific claim, in terms of specialism or even whether they are based anywhere near the Claimant . The work simply goes to the highest bidder. Lord Justice Jackson is keen to bring an end to this practice.
   

In essence, this should mean that a victim will be represented by his local firm of solicitors who can offer the best service, rather than filling in forms which will be dealt with by a solicitor or unqualified assistant many miles away. This can only be a good thing for the client – not to mention day time T.V. which should no longer be inundated with adverts primarily featuring that bloke who used to be on The Bill and Eastenders (how the mighty have fallen!)
We will all need to watch this space to see if Lord Justice Jackson’s recommendations will be put into place, but both the government and judiciary are nodding in approval.

In the meantime, if you have been injured in an accident as a result of someone else’s negligence, you should not hang around to bring your claim. Claims for personal injuries must usually be brought within 3 years so please give Rebecca Martin a call in Truro on 01872 245977 or Slade DeLacey if you’re in Devon on 01392 449373. We’ll be ready and able to deal with your claim no matter what changes are thrown at us!