Date 6 May 2011
On 29 March 2011 the Justice Secretary Kenneth Clarke announced wide ranging reforms to the way in which civil litigation is funded. The consultation document “Proposals for Reform of Civil Litigation Funding and Costs in England and Wales” sets out the Government's response to Lord Justice Jackson's report on funding litigation which was published in January 2010. Its intention is to reduce the costs payable by litigants whose opponents have the benefit of a conditional fee agreement colloquially known as a "no win, no fee agreement". This is particularly a problem for the NHS which each year pays out huge sums of money in legal fees to successful claimants.
The key proposals include:
- Abolishing the recoverability from an opponent of success fees and after the event (“ATE”) insurance premiums in conditional fee agreements. Under the current regime, unsuccessful parties are usually ordered to pay these additional costs, which can be substantial. Instead, the successful party will have to pay their lawyer's success fee and any ATE insurance premium themselves. The thinking is that this will make them take a greater interest in controlling the costs being incurred on their behalf.
- Allowing damages-based agreements (also known as contingency fees) in litigation. These allow lawyers to take a proportion (which will be capped at 25%) of the claimant’s damages in fees. This would increase the funding options available to claimants.
- Introducing a 10 per cent increase in general damages, (damages to compensate for pain, suffering, and loss of amenity) in claims for personal injury, nuisance and other civil wrongs to individuals.
- Introducing a mechanism to protect the vast majority of personal injury claimants from paying a winning defendant's costs (through qualified one way costs shifting). Under this scheme a losing defendant would continue to pay a winning claimant’s costs, but a losing claimant would only pay a winning defendant’s costs where – and to the extent that – in all the circumstances it is reasonable for him or her to do so.
- Other measures include encouraging parties to make and accept reasonable offers, introducing a new test to ensure that overall costs are proportionate and increasing the costs which can be recovered by people who win their cases without representation by lawyers.
The Government says it hopes the changes will act as a disincentive to anyone bringing "spurious cases" but Shadow Justice Secretary, Sadique Khan, warned they "could restrict access to justice" for poorer claimants.
Only time will tell.
If you would like more information or advice relating to a specific matter, please do not hesitate to contact Robert Ryall on 01727 798000 or any member of the Commercial Dispute Resolution team.
© SA LAW 2011
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