Government suffers two defeats over Jackson but reforms stay largely intact

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By Legal Futures

15 March 2012

McNally: not acceptable to say that CFA reform is good for everyone else, not the government

The House of Lords yesterday inflicted two defeats on the government over part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, but the main elements of the Jackson reforms remained intact.

Peers voted to exclude asbestos claims and then all industrial disease cases from the end of recoverability. However, a vote to put the 10% damages uplift and qualified one-way costs-shifting (QOCS) on the face of the bill failed.

The compromise on Jackson put forward by the Law Society, Association of Personal Injury Lawyer and Motor Accident Solicitors Society did not go to a division.

In the one other vote on the fourth day of the bill’s report stage, peers supported an amendment laid by former Paralympian Dame Tanni Grey-Thompson that imposes a duty on the Lord Chancellor to secure that a person eligible to legal aid advice is able to access it “in a range of forms at the outset, including securing the provision of initial face-to-face advice”.

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The aim was to remove the provisions for both a mandatory telephone gateway and the delivery of legally aided services exclusively by telephone.

In all the government has so far suffered nine defeats in the Lords on the bill.

Despite justice minister Lord McNally arguing against any exceptions to the end of recoverability, peers voted 189 to 158 to exclude asbestos-related cases, as proposed by crossbencher Lord Alton, and 168 to 163 to exclude all industrial disease claims, proposed by Labour justice spokesman Lord Bach.

Lord Alton said: “How it can ever be just to raid the compensation that someone has been awarded because they have proven their case in court – to take up to 25% of what they have been awarded to help them through the last days of their life. How can it ever be a matter of justice to do that?”

Lord McNally said: “I am not aware of anything associated with those cases which makes them particularly expensive to bring. I have not heard anything since which persuades me that there is anything particular about the nature of those cases – the cases, not the disease – which makesthem any harder to bring in legal terms than any other case.”

Though he rejected carve-outs for various other areas of litigation, the minister did offer a glimmer of hope over international human rights cases, saying he was happy to “re-engage” with interested parties before the third reading of the bill.

Lord McNally finally laid to rest the long-running question of whether insolvency related cases should be exempted from the end of recoverability given that it is an area where the government sometimes benefits from conditional fee agreements (CFAs). However, he told the House: “I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the government.”

Lord McNally said that the judiciary believed the 10% uplift should be done by the courts, while putting QOCS in the legislation, rather than leaving it to the rule committee, would make it far less flexible.

He also updated the thinking on the financial test for QOCS. “We agree that, for personal injury cases, there should not be an initial financial means test,” he said. “We are in discussion about whether there should be a financial contribution, although we recognise the arguments that there should not be. The Civil Justice Council, chaired by the Master of the Rolls, is helping the department on the way forward.”

Lord McNally was unable to confirm that controversial amendment 135A, which some thought meant that the end of recoverability would have retrospective effect, would not do that, but said he would confirm the matter shortly. The primary goal is to bring collective CFAs in line with the reforms.

Lord Thomas did not press to a vote his amendment to introduce statutory regulation of third-party litigation funding. Lord McNally said: “At the moment we are looking at how voluntary regulation is working in the area. However, my right honourable friend the Lord Chancellor is very aware of the situation and is keeping it under review.

“We do not think that statutory regulation through this bill is either the right place or the right time but we welcome the fact that my noble friend has put this issue on the political radar. Both lawyers and legislators will have to follow the matter closely to see whether we will need to return to it at some future date.”

The government also said there was no need for statutory regulation of third-party ‘contact’ by insurance companies as it is covered by Financial Services Authority rules.

At the end of the debate, Lord McNally refused to allow any exceptions to the ban on referral fees in personal injury cases, such as for trade unions and charities. “Trade unions will of course still be able to refer cases, without payment, to those best able to pursue them,” he said. “Nothing in the clauses prevents lawyers providing services free of charge to registered charities.”

However, he did accept the thrust of two amendments laid by Lord Hunt of Wirral seeking to tighten up the ban and will bring back amendments at third reading to address the issues raised. One would prevent the payment of a referral fee for some non-injury element of an injury claim, and the other would ensure there is not a way round the ban by routing payment to someone other than the person making the referral.

Labour amendments on making the payment of referral fees a criminal offence and halving the fees payable under the RTA portal will be addressed on the next day of report next week.


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