Jackson Review: Commentary by the Hailsham Chambers Costs Group
The final report of the Civil Litigation Costs Review was published at 11 am this morning. It is, as one would expect given its author, a weighty, thoughtful and impressive piece of work. It is also far more radical than many expected. It runs to some 584 pages, and it cross refers extensively to the interim report which was itself more than 600 pages long, even without counting the appendices.
Overall it is likely that Defendants and their representatives will be happier with the final report than Claimants' groups. Sir Rupert's overall task was to "make recommendations in order to promote access to justice at proportionate cost". Do his recommendations achieve the "proportionate cost" element of that rather better than "access to justice"?
The main recommendations are:
• The abolition of the indemnity principle
• The abolition of recovery of success fees and ATE premiums, partially compensated by an increase of 10% in PI general damages
• A ban on referral fees in PI cases
• Qualified one way costs shifting
• Fixed costs for fast track PI and in the future for all fast track cases
• Legalisation of contingency fees
• The creation of a Costs Council to decide on guideline hourly rates and fast track fixed costs
• Stronger case management including costs management
• A 10% increase of damages where a Defendant fails to accept a Claimant's Part 36 offer which is beaten at trial.
Our comments on these suggestions are as follows:
• Claimants and their advisors are going to be greatly troubled by the abolition of recovery of success fees and ATE premiums. One can see at once that certain types of cases, in particular cases with high costs but modest damages (perhaps because a Claimant loses a causation issue) will be hard to fund. A 10% increase in general damages is modest, and a maximum amount of the damages being paid out to the lawyer in success fees will mean that in low value cases, the lawyers will lose out, while in the more serious injuries, the claimant will lose out. Sir Rupert claims that most personal injury claimants will receive more damages: firstly, that is doubtful in itself, and secondly, even if it is right, it is because there are more claimants with minor injuries than those with serious ones, and it is undoubtedly the latter who will lose out.
• The recovery of success fees from damages either on the basis of a contingency fee or as a conventional success fee will cause conflict between solicitors and their clients. Where a case it settled on a lump sum basis how will it be decided which part represents past loss and general damages on which the success fee can bite, and which part future losses which are immune?
• "Qualified one way costs shifting", i.e. that the claimant may recover his costs from the defendant, but not the other way around (unless there has been unreasonable conduct) may serve to increase satellite litigation over what conduct is "unreasonable" and thus deserving of a costs order made against the claimant. Of course, the "qualification" may be of little effect in practice as, without the need to obtain after the event insurance (and the ATE insurers must be white with fright at this report), many claimants simply will not have any means to pay any costs order against them.
• The transitional process will be difficult. This is a big package of reforms that will take years to bring into effect. What is a solicitor who wants to start investigating a large case for which he would normally require ATE cover to do, given that ATE may be irrecoverable by the time the claim is issued?
• Will the effect of the abolition of the indemnity principle be to cause the same inflation of costs between the parties that the review decried in the context of CFA funded litigation?
• If the indemnity principle is abolished in order to prevent technical challenges by paying parties, will there be a knock on effect on consumer protection? To a large extent defendants have been the gatekeepers of the CFA regime, even if for their own benefit. If claimants' solicitors will be able to recover their full reasonable costs whatever their degree of compliance with regulations, is the threat of professional disciplinary proceedings a sufficient incentive to look after their clients' interests?
Will fixed fast track costs across the board lead to a drop in the quality of the handling of low value litigation? Will it be economical for ordinary firms of solicitors to take on such claims or will they become the preserve of high volume providers employing untrained staff? The immediate effects of the review and the time that it will take to put it into effect must be uncertain. The reforms are so extensive that considerable legislative change will be required as well as wholesale rewriting of large sections of the CPR. It is hard to see that this will be a high legislative priority either before or immediately after the forthcoming general election. Is it too cynical to wonder whether all or many of these reforms will be brought into effect in the foreseeable future?
Further, it is presented as a "coherent package of interlocking reforms" but some will require primary legislation (unlikely in the near future), some merely rule changes and some merely practice directions. If it is implemented piecemeal (as seems entirely possible) then its coherence may well be lost with some consequences unintended by Sir Rupert.
What can be said with certainty is that these are major changes and that if and when they are brought into effect they will have a major impact on all civil practitioners, particularly those practising in personal injury. There will certainly be the need for extensive litigation in order to map out the boundaries of the new regime and to test the effects of these reforms. We confidently expect to play a major role in that process.
Andrew Post, Alexander Hutton and Jamie Carpenter for the Hailsham Costs Group
13 January 2010
The Civil Litigation Costs Review report is available on the Judiciary website: http://www.judiciary.gov.uk/about_judiciary/cost-review/reports.htm
PLEASE NOTE The information and any commentary on the law contained on this web site is provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by any member of Chambers. The information and commentary does not, and is not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site. By accessing any of these articles you accept that you have no right or recourse against the providers of information on this web site.