The Jackson Reforms - Where are we now?
THE JACKSON REFORMS - WHERE ARE WE NOW?
On 1 April 2013 (and 30 April and 31 July) the world changes for civil litigation in England and Wales. The Jackson Review has produced a sea change as fundamental as the Woolf Reforms did with the introduction of the CPR in 1999. Whilst Personal Injury claims are the main target of the reforms all civil litigation is caught in the storm.
Whether you do Small Claims, Fast Track or Multi Track cases things will never be the same again.
The most obvious changes are to funding and costs assessment. The success fee on a CFA will not longer be recoverable for any agreement signed after 1 April 2013 and similarly with an associated ATE premium. But awards in such cases where quantum is to be assessed will increase by 10%. For personal injury cases the client cannot be asked to pay more than 25% of their past and general damages (future damages are untouched) for the claim or all of the past and general damages for an appeal. One wonders how many clients will agree to the lawyer taking all of those damages for an appeal. For non Personal Injury cases there is no limit.
A new type of funding will be introduced, namely the Damages Based Agreement (or Contingency Fee). This is a no win no fee agreement linking the fee to the value of the claim. Again for PI cases the fee is limited to 25% of past and general damages. For employment matters (where DBAs have been in use for some time) the limit remains at 35% and for all other civil claims it is set at 50%. These fees have to include VAT and all legal services (including advocacy) and any claims management services provided. In addition the fee is net of any costs recovered from the other side. So if you have a fee of 50% on a £10,000 claim and get costs of £4,500 from the other side your client only has to pay £500. Worse is that the indemnity principle still applies so in the case if the costs awarded against the other side are £6,000 they only have to pay £5,000 (the DBA fee). Finally the client is only responsible for payment out of money actually recovered. So if the other party has no money, you do not get paid!
One of the fundamental changes that will affect all cases is the alteration of the Overriding Objective to include proportionate cost as well as justice as its main aim. This is intended to make the pressure on costs even greater than it is at present.
In the Multi Track all cases except in the Admiralty and Commercial Courts will have to provide a detailed costs budget within 28 days of the filing of the defence. If this is not done then costs will be limited to court fees only. The court will approve or alter the budget and then use it for case management decisions and for costs assessment at the end of the day. Woe betide any party that seeks costs of more than their approved budget!
For those parties lucky to get a costs assessment it will be done provisionally if the costs are less than £75,000. If you do not like the assessed costs (either claimant or defendant) you can seek a hearing but if you do not improve the figure (up or down as appropriate) by at least 20% you will pay the costs of the assessment.
The Small Claims Track is the least affected but the increase of the limit to £10,000 from 1 April 2013 will mean many more cases falling into this no cost process. That raises questions about how these cases can be done viably. Consideration is still being given at the time of writing to an increase in the personal Injury Small Claims limit but those cases will be caught by the new limit anyway. To fall out of the Small Claims Track those cases currently have to have a Pain and Suffering value of more than £1,000 OR a total value of more than £5,000. That latter figure will be £10,000 after 1 April 2013.
Fast Track claims in personal Injury cases will be most affected as from the end of July 2013 they will mostly be subject to fixed fees. The fees set are those proposed by Jackson LJ in his report with a small uplift for inflation but the deduction of £700 to reflect the banning of referral fees. Other changes include the need to give a costs estimate when seeking permission for expert evidence.
But personal injury cases relating to Employers' Liability or Public Liability and worth up to £25,000 will be dealt with by computerised portals if liability is admitted quickly. These new portals will be implemented at the end of July 2013 along with fixed costs of £900 for claims up to £10,000 and £1600 for claims between £10,000 and £25,000.
From 30 April 2013 the fixed costs on the existing RTA portal will fall from the current £1200 to £500. At the end of July 2013 the range of the RTA portal will be increased to £25,000 and the costs for claims between £10,000 and £25,000 will be £800.
One wonders how many of these more complicated RTA, El and PL claims will stay within the portals when half of the current simpler claims already leave the process.
What is vitally important is that solicitors know how much it actually costs to run a case so they can ensure that their work is done profitably whether this is by de-skilling the work, becoming a niche practice or any other approach.
Gary Barker is a solicitor with 30 years experience in private practice and a former Head of Practice Development at the Law Society in London. He currently mixes practising with being a part time lecturer at the Open University and a CPD trainer.