Following Jackson LJ's review of civil litigation costs which culminated in a final report in January 2010, the coalition government has approved his suggested reforms and is pushing legislative change through in the draft Legal Aid, Sentencing and Punishment of Offenders Bill. The principal legislative changes will have an effect on the way litigation is funded and conducted in England and Wales including:
- the end of the ability to recover CFA success fees and after-the-event insurance premiums from a losing opponent at the end of litigation;
- the introduction of contingency fees ("Damages Based Agreements") in litigation where a lawyer can share in the damages awarded to a winning claimant;
- the introduction, in personal injury cases only, of "Qualified One Way Costs Shifting" in which an impecunious claimant will not be on the hook for a wealthy opponent's legal costs even if he or she loses the claim
Other costs reforms will take effect through the Civil Procedure Rules (CPR), most notably changes to the rules relating to settlement offers under CPR Part 36.
The government is hoping that finer details of each reform will be worked out in time for all of the costs reforms to be introduced as a package as of 1 October 2012. There is much to be done (in particular no details of the new Damages Based Agreements have yet been agreed on or published) but the will of the coalition government has so far pushed reforms through at a significant rate.
The reforms are designed to bring litigation costs under control, though they have had many critics. The view of many is that whilst reforms were clearly needed in some areas of the legal market, for example personal injury cases, the wholesale changes will damage the legal market and block access to justice for many individuals and businesses. On a broader level the abolition of recoverable success fees will deny parties the strategic and tactical advantages that these funding arrangements can bring to litigation which in turn often promotes early settlement of cases. Certainly all organisations who face disputes will have to carefully consider in future new ways of funding the dispute and methods of promoting settlement with opponents in appropriate cases.
Berwin Leighton Paisner is tracking the progress of the Legal Aid, Sentencing and Punishment of Offenders Bill through Parliament (it is now at the committee stage in the House of Lords) as well as the progress of the detail of the reforms by various legal working groups. We will keep our clients informed of any significant details and all progress towards planned implementation of the changes. Should you wish to know more please contact Claire McNamara or Sarah Breckenridge.