Jackson Review of Costs of Civil Litigation
The review of the costs of taking civil proceedings – undertaken by Lord Justice Jackson – was published in January 2010. I obviously need to comment on it here, since it considers an issue of fundamental importance to the English Legal System. But it is a long document which it is extremely hard to summarize.
The background – as discussed in Chapter 8 of the book – is that while many of Lord Woolf’s reforms to the civil justice system appear to have worked well, he did not secure a hoped-for reduction in the costs of going to court. As a consequence it is suggested that ‘access to justice’ – which was what Woolf was hoping to promote – may actually have been reduced. There is evidence that costs of litigation have risen because of the emphasis, in Woolf, of earlier disclosure of the issues in disputes required by the procedural protocols.
Any attempt to reduce costs face significant challenges. First, Treasury policy on court fees – that the Court Service should be broadly self-financing – has led to significant increases in court fees. Although there is some research evidence that court fees are not as significant deterrent to litigants as might be expected (Moorhead, 2007, What’s costs got to do with it? Available at http://www.justice.gov.uk/publications/research280607.htm) common sense suggests that the higher the fee, the more likely will litigants be deterred.
Second, lawyers want their work to be fairly (if not generously) rewarded. The bottom line is that if law firms make losses, they go out of business. Jackson found, however, that in many situations – particularly where the sums of money in dispute were relatively small – that costs charged by law firms had become disproportionate to the amounts in dispute.
Jackson also accepted, however, that a number of existing rules on costs – particularly relating to the indemnity principle (that the loser pays the winners costs) – were also a deterrent. He recommended that the indemnity rule be abandoned.
Jackson was convinced that, to achieve proportionality between what was at stake and the costs of arguing about what was at stake, there should be much greater reliance on the use of fixed costs in the fast track. In categories of litigation where it was not possible to set fixed costs, there should be a cap set as to the amount of costs that would have to be paid. A new Costs Council should be established to review these and related costs issues.
Jackson also wanted to see greater use of ‘before the event’ legal expenses insurance; abandonment of conditional fee agreements and the introduction of contingency fees (accompanied by a general uplift of around 10% in the awards of damages for personal injury).
In some areas – notably housing – Jackson adopted Lord Woolf’s view that any reform of costs had to be linked to reform of the underpinning law.
More generally, there should be greater emphasis on the use of different forms of alternative dispute resolution.
Implementation of these recommendation implies further changes in the culture of litigation which the Woolf reforms began. They will obviously take time.
As first steps, the government announced a consultation on costs in defamation cases. On 3 March 2010 the government stated that success fees under CFAs in defamation cases would be limited to 10%.
On 17 March 2010, the Judicial Executive Board announced the creation of a Judicial Steering Group to take implementation of Jackson forward. (see http://www.judiciary.gov.uk/about_judiciary/cost-review/index.htm).
I will keep you posted on developments as they emerge.