The defendant costs specialists

Jackson implementation

By on Mar 30, 2011 | 35 comments

The recent lobbying by claimant organisations has paid-off as the Government has entirely abandoned plans to implement the Jackson costs reforms.

Oh … sorry. I had pre-prepared two different posts in advance of the announcement yesterday to deal with either eventuality.

Let’s start again.

The recent lobbying by claimant organisations has been a complete waste of time and money and the Government has announced plans to press ahead with the Jackson costs reforms virtually in full.

As the Response to proposals for reform of civil litigation funding and costs in England and Wales says: “The Government intends to implement the reforms to no win no fee conditional fee agreements (CFAs), proposed as a package of measures by Lord Justice Jackson”. The plans include:

• Abolish the general recoverability of the CFA success fee from the losing side. In future any CFA success fee will be paid by the CFA funded party, rather than the other side. In personal injury cases, there will be a cap on the amount of damages that may be taken as a success fee. The cap will be set at 25% of the damages other than those for future care and loss. Maximum success fee to remain at 100%. – Yes. It’s really going to happen.

• Abolish the general recoverability of after the event (ATE) insurance premiums. The Government intends to have a tightly drawn power to allow recoverability of the ATE insurance premiums to cover the cost of expert reports only in clinical negligence cases. – The end of most of the ATE industry? There will probably be some left to pick up the pieces of ATE for own disbursements, unless solicitors decided to fund this risk themselves.

• There will be an increase of 10% in non-pecuniary general damages such as pain, suffering and loss of amenity in tort cases, for all claimants. – A small price to pay for defendants and insurers given the large savings that ending recover of success fees and ATE should bring.

• The recoverability of the self-insurance element by membership organisations, equivalent to the ATE insurance premium, will also be abolished. – Who would have guessed that a Conservative led government would be prepared to end this trade union gravy train?

• A regime of Qualified One Way Costs Shifting will be introduced for personal injury cases, including clinical negligence. This means that an individual claimant is not at risk of paying the defendant’s costs should the claim fail (except in limited prescribed circumstances), but that the defendant would have to pay the individual claimant’s costs should the claim succeed. The exceptions will be: (i) on behaviour grounds – where the claimant has acted fraudulently, frivolously or unreasonably in pursuing proceedings – so a reasonable claimant will not be at risk of paying the other side’s costs on behaviour grounds; and (ii) on financial means grounds – only the very wealthy would be at risk of paying any costs. This will not be extended beyond personal injury at this stage, so the normal costs shifting rules will continue to apply in other cases. – This is the bad news from defendant panel solicitors’ perspective as there will no longer be higher hourly rates recovered in successfully defended CCFA funded cases. Also the worry for defendants that it may not be commercially sensible to defend many low value claims. Not immediately obvious as to whether costs shifting to apply if a claimant fails to beat a defendant’s Part 36 offer (although the next proposal would seem to imply it would). If two-way costs shifting continues to apply in relation to Part 36 offers then it may leave a market for ATE cover for this risk.

• Part 36 will be amended to equalise the incentives between claimants and defendants to make and accept reasonable offers. This will apply to all civil cases. In particular, it will be made clear that where a money offer is beaten at trial, by however small a margin, the costs sanctions applicable under Part 36 will apply. An additional sanction (equivalent to 10% of the value of the claim) will be introduced to be paid by defendants who do not accept a claimant’s reasonable offer that is not beaten at trial. – The formal reversal of Carver v BAA.

• Damages-based agreements (DBAs/contingency fees) will be allowed to be used in civil litigation. Successful claimants will recover their base costs from defendants as normal but in the case of a DBA the costs recovered from the losing side would be set off against the DBA fee, reducing the amount payable by the claimant to any shortfall between the costs recovered and the DBA fee. The amount of the payment that lawyers can take from the damages in personal injury cases will be capped (at 25% of damages excluding for future care and loss). – Unlikely to take off in personal injury claims but will be attractive to claimants in commercial disputes.

• A new test of proportionality in costs assessment will be introduced. This will mean that only reasonable and proportionate costs may be recovered from the losing party. – It will be fascinating to see how this rule will be drafted if it is to avoid becoming the damp-squib that the current test of proportionality has become and is to avoid sparking-off enormous uncertainty and satellite litigation.

• The prescribed rates which successful litigants in person may recover from losing opponents will increase in line with inflation since they were set.

Changes to the CFA regime requiring primary legislation will follow as soon as Parliamentary time allows. Other changes will require changes to the Civil Procedure Rules or other secondary legislation. Further consultation will follow in due course, as appropriate. It is envisaged that the reforms will be implemented together, once the legislation is enacted, aside from the reversal of Carver v BAA and increases to recoverable fees for litigants in person which can be taken forward independently more swiftly.

Those hoping that a rebellion in Parliament might stop these proposals being brought in are likely to be disappointed if the initial reaction in the House of Commons is anything to go by. Some muted concerns, but broadly received cross-party support.

In addition, the Ministry of Justice is issuing a further consultation (closing date 30 June 2011) Solving disputes in the county courts: creating a simpler, quicker and more proportionate system which sets out, and seeks views on, proposals to reform the civil justice system in the courts in England and Wales. These include:

• Introducing a simplified claims procedure on a fixed costs basis, similar to that for road traffic accidents under £10,000, for more types of personal injury claim; exploring the possibility of extending the framework of such a scheme to cover low value clinical negligence claims; and examining the option of extending the upper limit of those simplified claims procedures to £25,000 or £50,000. The extension of the RTA PI Scheme to other areas of personal injury will not require a change in primary legislation and could be introduced by extending existing protocols or introducing new ones. A review of the existing scheme will be undertaken to decide if and when any extension should be introduced.

• Introduce fixed fees for fast track personal injury claims that fall outside the extended RTA PI process (for example where liability was not admitted).

• Increasing the upper jurisdiction threshold for small claims (excluding personal injury and housing disrepair) from £5,000 to £10,000, £15,000 or £25,000.

• Requiring all cases below the small claims limit to have attempted settlement by mediation, before being considered for a hearing.

• Introducing mediation information/assessment sessions for claims above the small claims limit.

How likely is it that these further proposals will see the light of day and is frantic lobbying going to help those worried about their jobs? Well, the Government has already made the difficult decision (which many believed would never be made) to scrap recoverability of success fees and ATE premium. These further proposals are, from their point of view, just further tweaking.

Jackson won.

Would the last person to leave Costsville please remember to turn off the lights?

    35 Comments

  1. I think the “jokey” comments you have made on most of your blogs regarding Jackson over the past 18 months are quiet frankly disgraceful Simon. You sit on the ACL Council and therefore promote the ACL to new students and happily take the thousands of pounds for fees, workshops, seminars etc that keep the ACL going.

    Then you make mockery of the fact that there is no future in the industry. It might be okay for you dealing with high end multi-track work, but what about the majority of others who are not? People who are ACL members and students who deal with fast track work? What will happen to them? Out of a job? Are you not suppose to want to safeguard these people and actually give a damn about their future given your position?

    Anonymous

    30th March 2011

  2. May I point out that the Anonymous poster above, is not in fact me, the original and best Anonymous (c)

    That being said, he does have a very valid point. Dancing on someone elses grave is in very bad taste.

    Ken Clarke’s speech yesterday was notable for 2 elements, being (1) his repeated reference to the claims against the NHS and (2) his astonishing dismissal of Mr Khans statement that the largest paid claims providers in the country were in fact the insurers themselves

    I expect we will have another 4 years of the futile costs war created and propogated by Defendants whom, far from being the gaurdians of Justice they hold themselves out to be, I know first hand to try everything to avoid the costs they themselves create. After that, even the Defendants will have nothing to fight over – but then again, consider the fact that certain firms have dedicated units to consider costs claims in the MOJ Portal, where there is supposed to be no dispute!

    Anonymous

    30th March 2011

  3. I estimate that roughly half of those working in the legal costs field (how one would calculate such a number has been debated for many years) now, will still be working in legal costs in 3 years time.

    That prediction may mean unemployment and financial hardship for many hundreds, if not thousands of people.

    For that reason, I concur with Anon’s comments above. Jokes and mikey taking, when many people may be made redundant, is in poor taste.

    Not only will the legal costs field be descimated by such changes, the PI/Clin Neg and low value Commercial Dispute Resolution areas of law, will also see an exodus of Grade D, C and possibly B fee earners (with some Grade A fee earners and Partners also finding themselves too expensive to carry out such work) surplus to requirement.

    The contentious legal world as we know it, has changed. I fear for those who have not planned ahead, or for whatever reason, are not in charge of their own destiny’s.

    TB

    30th March 2011

  4. I only wish that all my firm’s work was high end multi-track work.

    And those who assume that those who do deal exclusively with high end multi-track work will be immune from the fall-out of these reforms are wrong. One-way costs shifting will end a lot of defendant and claimant work (drafting and opposing defendant bills). An end to recoverability of success fees and ATE premiums will reduce the number of cases that get referred to costs draftsmen in the first place.

    The next few years are going to be rocky for all those who deal with personal injury work.

    As for those who deal with legal aid, they still have their government response to come.

    Simon Gibbs

    30th March 2011

  5. To be clear, I am the first Anonymous here. I think it is not just bad taste, Mr Gibbs is on the ACL Council. I have been encouraged to join by my employers and others in the field. Not to mention the fact that the ACL needs a constant flow of new members and Students.

    When a Senior Costs person and representative of the ACL makes such comments and I can think of many others in previous blogs you can understand why I am deterred from joining – not a good advertisment for the ACL.

    The BAR Council, various large PI firms, APIL, the Law Society just to name a few have spoken out against the reforms. Nothing from the ACL. Apart from the likes of Matthew Harman and Ian Stark endorsing the reforms, safeguarding their own interests I am sure. How much is membership this year? I think I’ll find my form.

    Anonymous

    30th March 2011

  6. If only the ACL had said something opposing the reforms. It would all have been so different…

    Simon Gibbs

    30th March 2011

  7. I’m not saying it would have been Simon, but when there is alot of commentary as there has been for a long time suggesting that the future is bleak and the Chairman and other members support these changes and still promote the course then you can see my point.

    I have no issue with people wanting to safeguard their business in any field. But the ACL is also an educational body and should have the interests of its members, students and future students at heart and as its priority.

    Anonymous

    30th March 2011

  8. I have only just been elected to the ACL Council and previous views I have expressed on the future of the profession were clearly mine and mine alone. Now that I am a Council member, any view I express on this Blog remain mine and mine alone.

    I understand that you are not currently a member of the ACL but complain that the ACL should have done more to represent your interests despite acknowledging that nothing they said on this subject was likely to make a difference to Jackson implementation.

    Why not complain to APIL that they didn’t do a better job campaigning? If you aren’t a member of APIL, don’t let that put you off.

    Simon Gibbs

    30th March 2011

  9. If the Chairman of the ACL endorsed the reforms then surely they have to resign?

    In my opinion they cannot accept renewal membership fees or training fees if they know the future is bleak.

    I presume the ACL will no longer be accepting new members? If they are, it should be free of charge.

    Its all over

    30th March 2011

  10. There will always be solicitor own client work, legal aid work and lititgation (including some areas of pi). Why therefore should the ACL be disbanded??

    (Editor’s Note: Not the Ben Pitts from BPW Legal Recruitment)

    Ben Pitts

    30th March 2011

  11. I don’t really see the point of your comment Simon, I am considering whether to do the course. The fact that the Chairman and other influential members have welcomed the reforms which you say will make majority in the industry jobless as you have done in your post this morning sums it up:

    “Would the last person to leave Costsville please remember to turn off the lights?”

    You have written this as an ACL Council member and why would anyone want to commence the ACL course if they are aware of such comments?

    Anonymous

    30th March 2011

  12. I guess I have the luxery of being in the so called ivory tower given the nature of the work I generally undertake. Trust me yesterday causes me concern.

    The last 12 months has seen claimant bashing by the judiciary (eg Pankhurst – an appeal that was in relation to interest and indemnity costs that was warped so as to trash CFAs generally)and now we have this.

    Where does it end? It seems to me that the proposals where only ever meant to reduce the governments liability on NHSLA matters and they simply didnt care what the effect was on the coal face as long as the NHS Bills were reduced

    chrisa

    30th March 2011

  13. add in the fact that insurers now cannot distinguish between age and sex when calculating premiums then clearly there is no way premiums will come down as they propose

    If they was true then why were 70% of insurers opposed?

    chrisa

    30th March 2011

  14. Sigh!!!!

    Pointless arguments again. Don’t read this blog if you’re gonna be offended by tongue in cheek comments.

    CD

    30th March 2011

  15. Anonymous (if that is your real name) I don’t write anything on this Blog as an ACL Council member. I am surprised if anyone who reads this Blog assumes that the personal views I express here represent the views of other Council members. Other Council members would be even more surprised.

    The future, in my view, is that the numbers working in costs is going to get much smaller. Those likely to survive are those who are trained to the highest standard. Why would anyone want to commence the ACL course? Possibly to maximise their chances of being one of those who will survive the shake-up. Others will make a different decision.

    Simon Gibbs

    30th March 2011

  16. Totally agree with you CD, pointless arguments here, shouldn’t take offence, after all its only people’s livelihoods and futures we are talking about isn’t it.

    Anonymous

    30th March 2011

  17. So basically what you are saying Simon is that you have a different view on this blog as to the view you express along side the ACL. I personally think you are backtracking.

    You can’t say that as this is your Blog your comments are not as an ACL Council member. That title sticks with whatever public comments in respect of costs you make and this Blog is public.

    Many people place reliance on blogs such as this given that there has been so little in terms of commentary and guidance from the ACL with regards to Jackson.

    Anonymous

    30th March 2011

  18. My own view and understanding is that Jackson was not endorsed by the ALCD/ACL particualr as to addittional liabilities but fixed fees were accepted because we all knew they were always coming. Remeber the consultation APIL leaving the consultation. Now they are still up for consultation and I cannot see one size fits all fee being imposed. I think and going purely from memory the models were not on that basis. When they do eventually come in I suspect there will still be areas to disagree over. Regardless of which side of the fence we are on or how far up any tower we are if it effects litigation costs it effects us all. Oh Simon forgot to congratulate you on the election. Bet you were not expecting to be savaged by Anonymous mark 2

    Kevin Hassey

    30th March 2011

  19. Spilt milk? No amount of in-fighting assists now. Put simply, the profession will adapt. The fittest will survive.

    Anonymous

    30th March 2011

  20. Maybe in view of the various comments above it would be apposite for you to cease writing your Blog as whatever you may say it will always be assumed by some to represent the views of the Council of the ACL whereas you have no mandate by other Council members to do so.

    Bonfire

    30th March 2011

  21. What this thread perhaps highlights, if in a round about way, is the intent of the ACL Council – they knew the change was coming, so they ensured they were ring fencing the smaller amount of work which would be left – cue Presidents speech announcing the ACL, and calling for the drawing of bills to be taken as restricted work i.e. could only be done by ACL members. Now compare that against their “campaign” to flood their coffers with new fees from trainees in that knowledge

    I think, doom and gloom though he may be and taking this blog far to personally, Anonymous Mark II does have a genuine gripe against the ACL. What are the ACL views? Who knows, certainly not anyone on here

    I am slightly disappointed that my sparring partners, Defendants Solicitor & Mr Williams, havent seen fit to comment yet. The former will possibly be rueing the fact this decision will impact heavily on his own practice – I would have thought the Defendants Panel solicitors endorsing their Insurers comments supporting Kackson might have taken their rose-colored glasses off long enough to realise it would kill them off too?

    Anonymous

    30th March 2011

  22. Ultimately, I think what can be taken from the above is that frustration is being vented. Perhaps at the wrong person, perhaps using the wrong outlet. It is not enough to justify having a pop at a new Council member elect, simply because the Council itself has perhaps been silent on the reforms it appeared to endorse.

    ACL knew what the fallout would be here, but were powerless to prevent it. Presumably hence the silence now. Stakeholder interests were always going to prevail.

    As an interested bystander and i felt compelled to contribute not because i loved Simon Gibbs’ quips about the bleakness of the future, but because i think he is being vented at and perhaps used as a scape goat for what is essentially frustration at the bigger picture. As Simon points out, everyone will be affected its just the decisions taken now to forward plan.

    I do think this is definitely a useful blog, and the last comment inviting cessation of the blog is just unnecessary. If you can’t have gallows humour then what kind of world would this be? Election to the ACL and perceived ivory towers are all a smokescreen, for what perhaps could be deemed as a less worthwhile pursuit.

    May i suggest that instead of sniping, we all set about adjusting business models and intellectually discussing (and indeed facing) the impact of something nobody, not APIL, the ACL, AJAG or anyone else was ever going to prevent. Jackson, after enjoying his various and entirely irrelevant ‘jollys’ to Europe; had made his mind up extremely early on. What followed was procedural and in the advent of the coalition cuts i think saving the NHS money was used as a quick way to nip this thorny question in the bud.

    Maybe if the public consultation period can be used to highlight the impact on an average individual’s access to justice rather than the loose patch stitched by the coalition onto the NHSLA’s purse then the final tweaks come August may not actually be the ‘click’ of the light switch being flipped by the last to leave Costsville.

    Intellectual discussion and positive respect for one another on forums such as this are, as i see it, the only useful thing we have left.

    Anyone got the number for HR at Tesco Law?
    (joke)

    Anonymous

    30th March 2011

  23. Or rahter than that Simon could simply not rise to the bait. He is perfectly entitled to have his blog within which he is perfectly entitled to express his own views. 99% of people who read this will understand that with no difficulties.

    In terms of the changes, we shall all have to adapt, make our own decisions and choices etc. It is largely irrelevant to all of this (in my opinion) for an anonomous poster to seek to attach disproportionate weight to Simon’s personal blogs in terms of the pending shake up.

    Perhaps the poster should focus his energies elsewhere, i.e. making those decisions and considering the various other sources of information available re: the Jackson changes.

    Whether or not Simon’s own views are correct / incorrect is hardly the most important thing to focus on

    CostsLeeds

    30th March 2011

  24. “A true friend stabs you from the front”

    Oscar Wilde

    Anonymous

    30th March 2011

  25. Simon appears to me to have made his position abundantly clear and there seems to be no reason why he can’t express his own views on here. In fact, I think it might be rather difficult to stop him!

    Keep up the good work Simon – this blog serves a very useful function.

    Anonymous

    30th March 2011

  26. “Maybe in view of the various comments above it would be apposite for you to cease writing your Blog as whatever you may say it will always be assumed by some to represent the views of the Council of the ACL whereas you have no mandate by other Council members to do so”

    Didnt release government did away with free speech too yesterday. The comments that people are largely referring to seem to be in the most part pre election to ACL council

    chrisa

    30th March 2011

  27. Can I just say that our lights are going out on Friday at 1:00pm but it is to allow a new mater to be fitted.

    Gallows humour is fine by me. I agree with Simon that we are all people in costs will be adversely affected by this.

    As a profession we are going to need to be match fit, good at what we do and have more than a bit of good fortune if we are to come through this.

    I also don’t get why people hide behind anonymity?

    People should have the courage of their convictions I reckon.

    Andy Ellis

    30th March 2011

  28. Andy I don’t see the point in giving my name as none of you will know me and I am not cool enough to have a link to a website.

    I have noticed on here that many of you who do reveal your identities often bring up the issue of people “hiding behind anonymity” when an argument is lost or valid points are made against you that you won’t concede.

    Just to add – I’ve just been on David Cameron’s blog and he has said that he thinks that all taxes should rise by 50%, women should be no longer allowed the vote, same sex civil marriages should be banned and all immigrants should be treated as second class citizens. But don’t worry though it is only his “personal” blog and therefore not his views as a Prime Minister or those of the Government.

    Good night everyone, and I have decided I will reveal myself… they call me FTF (Fast Track Fred).

    Anonymous

    30th March 2011

  29. Didn’t know Ken Clarke was had a good aim- he’s managed to blow the legs off every union in one shot!

    Anonymous

    31st March 2011

  30. @Anonymous

    I think the reforms are bad news for consumers, bad news for lawyers, bad news for costs draftsmen and good news for insurers.

    The last point means that those of us who deal almost exclusively with defendant work from insurers are unable to publicly argue against them.

    The question for those who deal with multi track costs is this: how long will it take for the fixed costs levels to be agreed. I suspect that won’t be easy.

    As to this blog, Simon is just being realistic. If half the people employed in costs were still doing costs in three years’ time then I would be amazed.

    Defendant Solicitor

    31st March 2011

  31. Survival of the fittest, well i’ll be ok then cos i’m smoking hot!!!

    CD

    31st March 2011

  32. Yes Simon is akin to the Prime Minister

    CostsLeeds

    31st March 2011

  33. Sorry to go off topic but it is in relation to reforms. Anybody any expierence of the Leeds pilot for assessments. Is it working. May not possibly matter one way or the other as may be hell bent on rolling it out regardless

    Kevin Hassey

    1st April 2011

  34. Dear Defendants Solicitor

    I very sincerely thank you for your honesty and realism.

    I agree entirely with your comments about Simon. Cutting the wheat from the chaffe is not always a pleasant excercise, but also sometimes necessary

    (ps, no, me agreeing with you is not an April Fools!)

    Anonymous

    1st April 2011

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