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Civil Litigation Costs: Jackson’s Final Report Recommends Sweeping Changes

Lord Justice Jackson has recommended sweeping reform of the way civil litigation is funded (including raising civil damages awards by 10% and introducing US-style contingency fees) in his Final Report on his Review of Civil Litigation Costs.

Just over a decade ago, the Woolf reforms to the civil justice system brought about a fundamental change to the way disputes are handled by the courts.  They have been hugely successful in shortening the length of time cases take to come to trial, and indeed in encouraging litigants to settle disputes before trial.  It was recognised however that the Woolf reforms have not been successful in curtailing the high cost of litigation.  As Jackson LJ notes in the foreword to his Report; “In some areas of civil litigation costs are disproportionate and impede access to justice”.

The Report therefore proposes a package of measures “…designed to control costs and promote access to justice”.

Some key recommendations include:

·        “No win, no fee” Agreements – Conditional Fee Agreements (“CFA’s”) are most commonly seen in “no win, no fee” agreements.  Jackson regards them as the major contributor to disproportionate costs in civil litigation.  The lawyer’s Success Fee (which can be up to 100% of his normal charge) and the cost of insurance to cover the claimant against the costs of losing the case, are presently recoverable from a losing defendant.  Jackson recommends that these should no longer be recoverable in this way, but borne by the claimant.

·        Damages in Personal Injury Claims – In order to ensure that claimants are properly compensated, it is recommended that general damages for pain and suffering should increase by 10% and that any success fee for the claimant’s lawyer be capped at 25%.

·        Referral Fees – Jackson is critical of the way some lawyers “buy” cases, particularly personal injury claims, from claims management companies.  He believes that such fees add to the cost of litigation without adding any value and should be outlawed.

·        Qualified One Way Costs Shifting – Recognising that insurance premiums add to the cost of litigation, one way costs shifting can remove the need for insurance.  This means that a claimant will not have to pay the defendant’s costs if the claimant loses, but the defendant will have to pay the claimant’s costs if the claimant wins.  The court will retain the power to order otherwise in appropriate cases.  Jackson accepts the categories of litigation where this will apply need to be agreed, but suggests that personal injury, clinical negligence, judicial review and defamation claims might be suitable.

·        Fast Track Costs  - Most claims of a value between £5,000 and £25,000 are dealt with under the fast track process.  Jackson envisages a time when all costs on the fast track are fixed.  For now, he suggests fixing costs for some cases such as personal injury, and capping costs at £12,000 for pre-trial work in other cases.

·        Contingency Fees – such schemes, whereby the claimant’s lawyer takes a percentage of any damages awarded, are presently outlawed in contentious cases.  Jackson recommends that they be allowed, subject to safeguards and a rule that a losing party only pays the claimant’s “conventional” costs with the claimant paying any difference owed to his lawyer himself.

The Report is nearly 600 pages long and contains many other detailed proposals.

If the recommendations in the Report are implemented (and it is likely that many will be), they will represent a fundamental change in the way civil litigation is funded in England and Wales.  Many of the recommendations will need primary legislation to be actioned, such as the scrapping of the recoverability rules.

If you have any questions about the Report, please get in touch with your usual Exchange Chambers contact.