The defendant costs specialists

Jackson Costs Review – Part 6 – The Political Element

By on Jul 10, 2009 | 3 comments

Lord Justice Jackson’s Civil Litigation Costs Review (see previous posts) raises the possibility of radical changes to the current system. However, how likely is it that his eventual proposals will ever see the light of day?

One of the most likely proposals he will put forward is a fixed fee regime for all stages of fast track cases. This, of course, is something very similar to the Ministry of Justice’s previous proposals, in the consultation paper Case track limits and the claims process for personal injury claims, to introduce a new claims process for all personal injury claims, except clinical negligence, and introduce a fixed costs regime to cover such cases. In the event, that was largely abandoned with no more than a limited new scheme for lower value RTA claims proposed.

Why did the Ministry of Justice back-down on its own initial recommendations? At the time, Stephen Haddrill, the Association of British Insurer’s Director General, commented: “And the exclusion of workplace-related claims, which take on average three years to settle, is illogical and bizarre. Trade union pressure must not be allowed to block change.” What is the interrelationship between trade unions and government policy? One theory is that the introduction of fixed fees to a wider category of claim and, in particular, EL claims would have had a downward impact on the fees that claimant solicitors were able to recover. If one accepts that a large proportion of trade union backed cases are “bought” by trade union panel solicitors, through referral fees paid to the trade union, any reduction in fee income would reduce the amount that solicitors could pay in referral fees. The trade union income generated by referral fees, and there is no reason to suppose this is not significant, enables trade unions to make political donations. These have traditionally been to the Labour Party. The (conspiracy) theory is that trade union pressure on the Government led to the change in policy. It would have been suggested that a move to fixed fees for EL cases would lead, indirectly, to a reduction in political donations to the Labour Party. The Legal Costs Blog is unable to comment on whether there is any truth in these allegations.

Is there any reason to suppose that the Ministry of Justice will change its mind, again, if Jackson LJ comes out firmly in favour of fixed fees for fast track claims when he publishes his final report in December? It seems unlikely. However, matters do not stop there. Jackson LJ’s final report is likely to be published shortly before the next general election. All the signs are that the new government will be a Conservative one. How willing will the Conservatives be to implement fixed fees?

There are three possible factors that will be at work. Firstly, a Conservative government is unlikely to have any reservations about introducing changes that might reduce a source of income to the Labour Party. Quite the reverse. Secondly, a Conservative government is likely to have some sympathy for insurers, and businesses that pay insurance premiums, who have previously been faced with disproportionate legal costs. Thirdly, any new government is going to face a serious public sector deficit and be looking for any areas where savings can be made. Any fixed fee regime is likely to reduce the total amounts paid out in terms of legal costs. This would have a positive impact on the budgets of the NHSLA, government departments and local authorities, all of which are funded directly or indirectly by the public purse. Jackson LJ’s final proposals, assuming they do include fixed fees, are likely to have a number of attractions to a new Conservative administration. The timing of the final report may be fortuitous for Jackson LJ.

    3 Comments

  1. Simon

    Speaking as someone who both works in costs and is a fully paid-up Tory, I would be both surprised and disappointed if a new Tory government found the time or the inclination to embroil themselves in this farrago when there are so many other pressing things they could and should be getting on with, like repairing the damage done to the whole country by their feckless predecessors.

    If the past 12 years have taught us anything it is that any policy of continuous meddling and goalpost-shifting is doomed to fail, at great expense.

    Regards

    Lee Whitehead
    Legal Consultancy Services Costs Team

    Anonymous

    12th August 2009

  2. A most biased Defendant based blog, the argument of political bias is correct but bias being the pressure being put on government from the power and lobbying of the insurers. There was a review the year before in which it stated to leave the regime alone which in the large works. Defendant insurers often take unreasonable approaches/stances forcing costs up and then use there own unreasonable conduct in their favour.

    Anonymous

    18th August 2009

  3. As an experienced PI fee-earner, I wonder if the writer has any inclination to set out all the facts. I have taken so many cases to the doors of a court only to have the Defendant back down that I have not had time to calculate the time wasted. Maybe a prompt admission of liability and a fair offer that the insurance compant always ends up paying could reduce the waste of time.

    Ray Deans

    12th January 2010

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