Further details of how the Jackson reforms are to be implemented have been released by the government.
The reforms will be implemented in April 2013 through Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (the Act), and associated orders and regulations and changes to the Civil Procedure Rules, subject to a delayed implementation for mesothelioma claims, which will not come into effect until a review has been undertaken, and insolvency claims, which will not come into effect until April 2015). In short:
CFAs / ATE
The Act will abolish the recovery of success fees and after the event (ATE) insurance premiums from the losing side.
ATE in Clinical Negligence Cases
The provisions in the Act allow a limited exception in respect of clinical negligence cases where ATE insurance premiums relating to expert reports will remain recoverable.
25% cap on success fees
The success fee in personal injury cases will be subject to a cap of 25% of damages (subject to this amount not exceeding the regulatory maximum of 100% of base costs), excluding damages for future care and loss.
The Act will allow the use of damages-based agreements (DBAs) in all areas of civil litigation. There will be a 25% cap on the amount of damages, excluding damages for future care and loss, that can be taken as the lawyer’s fee under a DBA in personal injury cases. For all other cases under a DBA in civil litigation the cap will be 50%, save for cases in the Employment Tribunal where this is aready set at 35%.
10% increase in non-pecuniary general damages
There is to be a 10% increase in non-pecuniary general damages such as for pain, suffering and loss of amenity, which it is said will help balance the impact of the CFA changes. See Simmons v Castle.
A system of qualified one way costs shifting (QOCS) in personal injury cases will be introduced so that claimants conducting their case properly will not have to pay towards defendants’ costs if the claim fails.
Increased sanctions under Part 36
The sanctions under Part 36 of the Civil Procedure Rules are being reformed in order to encourage early settlement.
There will be a new stricter rule on proportionality, to be set out in Rule 44.4(5) (recently unveiled by Lord Neuberger) as such…
44.4(5) Costs incurred are proportionate if they bear a reasonable relationship to:
(a) the sums in issue in the proceedings;
(b) the value of any non-monetary relief in issue in the proceedings;
(c) the complexity of the litigation;
(d) any additional work generated by the conduct of the paying party; and
(e) any wider factors involved in the proceedings, such as reputation or public importance.’
The Act prohibits the payment or receipt of referral fees in personal injury cases.
It is intended that existing RTA PI scheme be increased from £10k to £25k and expanded to cover employers’ liability and public liability claims.