Articles From the Team

Jackson Reforms – Implementation

Jackson Reforms – Implementation

I recently attended a talk held by the Manchester Law Society seeking to provide a current overview of some of the key changes to be brought about by the implementation of the Jackson reforms to civil litigation costs and funding.

The talk was hosted by Lord Justice Kay (Vice President of the Court of Appeal) and provided a glimpse at some of the key changes. Whilst the deadline for implantation remains a tantalisingly close April 2013, there still remains much to be done albeit that certain key legislative measures are now in place, namely, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”). Certain other aspects do not require legislative measures but will be within the remit of the judiciary (see below on the increase in general damages).

I have highlighted below some (but not all) of the changes as highlighted by Lord Justice Kay which can be broken down under 3 general heads:

(i) Changes in funding arrangements; (ii) Matters designed to make legal processes more efficient; (iii) Management of costs within proceedings.

Changes in Funding Arrangements

The most significant change will centre around the abolition of the recoverability of After the Event Insurance Premiums and Success Fees. In the instance of Success Fees there will be an exception albeit temporary for cases of mesothelioma). The implementation date has yet to be fixed but invariably will be April 2013. As a result the recoverability of success fees will cease in relation to CFA’s entered into after the implementation date.

Similarly, AEI premiums will no longer be recoverable in relation to any costs insurance policy taken out in proceeding after 1st April 2013. There is likely to be some debate about alterations or extensions made to policies after that date but which were taken out prior to the 1st April 2013 but the wording of LASPO could offer some degree of flexibility.

The changes are therefore quite significant however a number of other measures are set to take effect as a means to balance the impact:

(i) Damages based agreements will be permissible (previously only really seen in the context of employment claims) – Draft regulations have been prepared by the government which do impact on the scope of such agreements which would see a cap of 25% of general damages for PI and 35% for employment. (ii) 10% increase in general damages – this is something to be dealt with at the judicial level as historically damages in PI are not set by Parliament. This has been addressed in the matter of Simmons v Castle (Number 2)[2012] EWCA Civ 1288 which made clear that the 10% increase in damages would not apply to any Claimant who brought proceedings under a CFA entered into before 1 April 2013; (iii) Qualified one-way cost shifting – this is one of the most interesting developments and in essence will provide that an unsuccessful Claimant will not be at risk of costs (even, it would seem, on discontinuance). Undoubtedly this is likely to be met with some consternation with the fear that it will encourage those to take action without fear of any consequences and promoting a “have a go” attitude. There are however likely to be some instances in which QOCS protection will be lost such as fraud, failure to beat a Part 36 offer or if the claims is struck out by the Court. It is nonetheless a significant divergence from the long held approach of costs following the event.

Matters designed to make legal processes more efficient

The anticipated changes are aimed at stream-lining processes and making them more case specific and include:

(i) Changes to disclosure – no longer will there be the assumption of disclosure on a standard basis and the Court and the parties will be required to address the issue of disclosure at CMC and how this should be addressed i.e. limited to specific and identified issues; (ii) Changes to witness statement – to encourage and/or limit the focus of statements and subject matter to specific topics; (iii) Changes to Expert evidence – both changes to the method to obtain permission and the manner in which evidence is given (including sequential evidence); (iv) Encouragement of the use of Alternative Dispute Resolution (ADR) almost as a pre-cursor to all litigation.

Costs Management

Again a number of key changes will arise including:

(i) Greater emphasis on Proportionality – whilst not clear, on a practical level this is likely to entail assessing costs in the usual manner and then providing a firmer application of proportionality across the value of the claim; (ii) The implementation of costs budgets to be given in all multi-track cases issued after 1st April 2013 at the outset of proceedings (approximately one month after a defence has been filed) together with the rigid application of those costs budgets at assessment. The emphasis would appear to fall heavily on the parties to come back to court in the event that there were any change in circumstances which would affect the budget previously provided (and most likely to justify such changes). Wider concern has been expressed regarding the potential for additional costs being incurred in circumstances where the parties have to return to Court to deal with such changes to budgets. (iii) Enhanced damages on Part 36 – this has been incorporated in section 55 LASPO and results in an uplift in claimant damages if a claimant beats their own offer to settle at trial. Currently this would look like 10% of damages up to £500,000, plus 5% between £500,000 and £1 million with an overall cap of £1 million. (iv) Already announced has been the Government’s intention to reduce the fixed costs allowed for RTA Portal Claims (where liability is admitted) – at present this would mean that claims valued at £10,000 will only be able to claim £500 in costs from next April (down from £1,200) and for claims valued at £25,000, costs will be limited to £800 (down from £1,600). Even at such an early stage this has resonated in the market with a number of PI firms reducing numbers of fee earners.

The changes are therefore quite significant and far reaching and will necessarily have an impact on access to justice. What remains to be seen is how practitioners and firms will react and the means by which they will seek to address the question of funding from the outset. Inevitably, post April 2013, there will be challenges to approach and implementation and indeed litigation arising centred around costs which may in the short-term have a bearing on proportionality.

Indeed not all matters are set in stone and there is further work to be done.