Page last updated at 20:13 GMT, Thursday, 14 January 2010

Radical plans to shake up costs of civil cases

By Clive Coleman
BBC Legal Affairs analyst

The biggest ever shake-up to the costs of taking cases through the civil courts is contained in proposals in a report by one of the most senior judges in England and Wales.

Judge's gavel
The senior judge examined "No win, no fee" agreements

The civil courts deal with personal injury claims, disputes over goods and services, and landlord and tenant actions, among others.

Lord Justice Jackson's Review of Civil Litigation Costs is a result of a recognition that it is simply too expensive for many people and small companies to bring or defend civil cases.

"What I want to do is to focus the system so less money is paid to intermediaries and others in the process, and more money is paid to victims," he told the BBC.

"I am concerned about individuals, small businesses and others who need to use the courts."

His proposals are radical. He has looked at the factors forcing costs up in civil actions, and in particular he has focussed on Conditional Fee Agreements (CFAs), more commonly known as "no win, no fee" agreements.

They have proved controversial in personal injury and defamation and privacy cases where the winning party can recover, in addition to damages, a hefty lawyer's "success" fee and "After the Event" (ATE) insurance premiums taken out by the claimant to protect against the costs of losing.

It's the claimants, the ordinary people that can't bring cases unless they can get a no win no fee agreement, who will get a substantial amount of money taken off them by their lawyers
Steve Hinds
Director of the Legal Action Group

He proposes that success fees and ATE insurance premiums should cease to be recoverable from unsuccessful opponents in civil litigation. This will have particular significance for personal injury claims where no win no fee agreements are most common.

"If this recommendation is implemented it will lead to significant cost savings, whilst still enabling those who need access to justice to obtain it", he wrote.

Instead he proposes success fees will be paid by claimants to their own lawyers out of their damages, but they'll be capped at 25% of the total, and to ensure fairness he would like a 10% rise in general damages for pain and suffering.

However, his proposals have led to concerns.

"It's the claimants, the ordinary people that can't bring cases unless they can get a no win no fee agreement, who will get a substantial amount of money taken off them by their lawyers," said Steve Hinds, Director of the Legal Action Group which promotes equal access to justice.

Other proposals include:

Fixed Costs for Fast Track Claims:

One of the problems faced by people or companies of modest means wanting to bring or defend civil claims is that costs are unpredictable.

Accordingly, Lord Justice Jackson is recommending fixed costs for what are known as Fast Track Claims of up to £25,000 where the trial can be concluded in a day.

He believes this will lead to certainty, avoid the further expense of cost assessments and ensure recoverable costs are proportionate to the case.

Referral Fees:

The proposals also deal a heavy potential blow to Claims Management companies, sometimes referred to as Claims Farmers.

These companies currently find and sell legal claims to firms of lawyers in return for a referral fee. Lord Justice Jackson recommends lawyers should not be allowed to pay referral fees in respect of personal injury cases.

Cost shifting:

There is another major proposed change to the established rule that the loser pays the winner's costs.

Under Lord Justice Jackson's "Qualified one-way costs shifting", claimants will not be required to pay the defendant's costs if the claim is unsuccessful, but the defendant will be required to pay the claimant's costs if it is successful.

This system will not apply to all litigation, but the judge sees it as potentially beneficial in personal injury, clinical negligence, judicial review and defamation, where a person with a meritorious claim should not be put off by the threat of a hefty adverse costs order.

The proposals will require political will and primary legislation. The Justice Secretary Jack Straw, who criticised no win, no fee lawyers at the 2008 Labour Party Conference, has said he will consider the report fully.

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