Lord Justice Jackson’s blueprint to reform the cost of civil litigation is to be implemented almost in full, Lord Chancellor Ken Clarke announced today, with the government predicting that law firms will adapt to retain their profitability, and that it may encourage new players into the market.
Alongside the result of Jackson consultation, the Ministry of Justice (MoJ) also unveiled a further consultation on reform to the county court that includes extending the road traffic accident (RTA) claims process, tripling the small claims limit, and introducing a new four-stage “dispute resolution regime” that seeks to head off all money claims worth less than £100,000 before they reach court.
Despite around 70% of the 625 respondents to the green paper opposing the thrust of Jackson, the MoJ is pressing ahead with the reforms with just a few refinements:
- After-the-event (ATE) insurance will be recoverable to cover the cost of expert reports in clinical negligence cases.
- Qualified one-way costs shifting will only apply to personal injury “at this stage”. The consultation response adds: “The government will continue to discuss with stakeholders how the rules should be drafted, including whether any minimum payment to a successful defendant’s costs should be payable by the losing claimant in order to prevent speculative claims.”
- In addition to the 10% “sanction” on defendants who fail to beat a claimant’s part 36 offer at trial, “the government is minded to explore an alternative sanction (linked to costs rather than damages) for claims where a remedy other than damages is sought, to avoid satellite litigation around the court’s valuation of such claims”.
- Claimants will not be required to obtain independent legal advice before entering into a contingency fee agreement.
Briefing reporters this afternoon, justice minister Jonathan Djanogly said the proposals would “reverse the mechanics of the compensation culture”, adding that whether or not there actually is such a culture is not the argument. He said ending recoverability of success fees and ATE premiums would save the NHS £50m a year.
He said ending recoverability means “lawyers will have to more carefully consider if cases go through”, while claimants “will want to hunt around to see who is charging the lowest fees”. He added that the market for personal injury services “may well expand” as a result.
The consultation response says: “While it may be that some claimant solicitors will lose out on their current business models based on the substantial additional recoverable success fees, it does not follow that claimant solicitors cannot and will not adapt and continue to be profitable in future. Still less does it follow that claimants will not be able to pursue meritorious claims, and damages received at proportionate costs.”
Mr Djanogly said the government would not decide on whether to act on referral fees until the Legal Services Board completes its investigation into the issue, adding that it would also want to see what impact alternative business structures have on the market. Describing referral fees as a “symptom, not the cause”, he said he expected referral fee levels to come down “signficantly” as costs fall.
The new consultation paper, Solving disputes in the county courts: creating a simpler, quicker and more proportionate system, puts forward a raft of reforms to the county courts:
- Extending the limit of the current RTA process to £25,000 or £50,000 (capturing 90%/95% of all RTA claims).
- Introducing a variation of the process for public and employers’ liability cases – although Mr Djanogly would not commit to a timetable for this – while the NHS Litigation Authority will pilot a similar scheme for low-value clinical negligence, with the upper claim limits to be determined following the consultation.
- Fixed recoverable costs for all fast-track personal injury claims not covered by the extended processes.
- Mandatory pre-action dictions for money claims under £100,000, involving a staged process with fixed costs at each stage. This could involve:
- An initial triage of the options for resolving the dispute;
- If unresolved, a stage of evidence gathering;
- Then negotiation/settlement; and
- Trial, at which the parties would produce joint evidence packs and apply to the court for a final hearing.
- Increasing the small claims threshold to £15,000, adding 12,000 cases to the small claims court’s current workload of 93,000, although the £1,000 limit for personal injury and housing disrepair would remain.
- Compulsory mediation in small claims, while there would be a compulsory mediation information session for higher-value cases up to £100,000.
- Cases below £100,000 cannot be started in the High Court (currently £25,000), bringing around 500 cases into the county court.
- Establish a single county court across England and Wales.
In the Commons debate that followed Mr Clarke’s statement, his predecessor Jack Straw called on the Lord Chancellor to ban “parasitic” claims management companies, saying that he regretted not having done so himself when in office.