Shake-up in civil litigation costs

Lord Jackson publishes reforms on civil litigation costs

A dramatic shake-up is on the cards for civil litigation costs, following recommendations from Lord Justice Jackson that bring to an end his year-long review.

MPS has long held concerns about the way in which costs are managed in clinical negligence cases. Of all the jurisdictions in which MPS operates, England and Wales are the only countries where damages form the smallest percentage of total payments in low value medical claims – and where claimants’ costs form the highest percentage. The key proposals are:

• Ban on recovery of conditional fee arrangements (CFAs). These arrangements, ie, “no win no fee”, mean that claimant solicitors only get paid in the event of a successful outcome; their fees are paid by the losing defendant. CFAs are widely seen as a primary driver of escalating costs, as claimant lawyers can prolong a claim and charge a “success fee” if they win the case – often doubling the lawyer’s usual hourly charge. Lord Justice Jackson recommends that claimants should pay these fees themselves from their damages. However, the maximum amount that lawyers can deduct from damages is 25% of damages for past loss. 
• Ban on recovery of ATE premiums. These insurance premiums are taken out by claimants to protect themselves against the “risk” of having to pay defendants’ costs. These premiums are often substantial and, currently, losing defendants pay the premium, along with the claimant’s legal costs and their own costs. 
• 10% uplift on general damages. This will help claimants pay costs that would have been recoverable from the defendant. 
• Introduction of qualified one-way costs shifting. This means that the losing claimant will pay only a limited contribution to the defendant’s costs – but the losing defendant will pay the claimant’s costs. The court has discretion to make a different costs order in certain circumstances.

We welcome these proposals, which suggest significant changes to the civil litigation process, as they are fair to both claimants and defendants. It is imperative that the government acts on these recommendations. We are pleased these proposals appear to have  cross-party support, and that Lord Justice Jackson will continue to oversee the implementation of his proposals, possibly by October 2010.